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Money Laundering Policy Implementation Guide
(U) Money Laundering
(U) Policy Implementation Guide
(U) Federal Bureau of Investigation
(U) Criminal Investigative Division
0359PG
(U) December 10, 2010
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GENERAL INFORMATION: Questions or comments pertaining to this policy
implementation guide can be directed to:
Federal Bureau of Investigation (FBIHQ)/Criminal Division
Financial Crimes Section, Asset Forfeiture/Money Laundering Unit
Division Point of Contact: Unit Chie
(NOTE: This document supersedes The Money Laundering Manual dated
4/15/2007; EC 27B-HQ-C1158008, Serial: 333 (“Money Laundering Program
Matters Money Laundering Investigations Use of Cooperating Witnesses”) and EC
272B-HQ-C1158008, Serial: 357 (“Money Laundering Program Matters Money
Laundering Investigations - Transactions in Foreign Countries”)
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PRIVILEGED INFORMATION:
Any use of this report, including direct quotes or identifiable paraphrasing, will be
marked with the following statement:
This document and its contents are the property of the FBI. If the document or its
contents are provided to an outside agency, it and its contents are not to be distributed
outside of that agency without the written permission of the FBI.
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(U) Table of Contents
1. (U) Scope 1
2. (U) Roles and Functional Responsibilities 2
2. 1 . (U) Asset Forfeiture and Money Laundering Section (AFMLS) 2
2.2. (U) United States Attorneys (USA) 2
2.3. (U) FBI’s Asset Forfeiture/Money Laundering Unit 3
2.4. (U) Financial Crimes Enforcement Network (FinCEN) 3
2.5. (U) Financial Action Task Force (FATF) 4
3. (U) Policies 5
3.1. (U) Predicated Investigative Methods and Approval Levels 5
3.1.1. (U) Traditional or Overt Money Laundering Investigations 5
3.1.2. (U) Money Laundering Transactions That Involve the Use of an
Undercover Employee 5
3. 1 .3. (U) Investigations That Involve the Use of CHSs 6
3.1.4. (U) Providing FBIHQ Notification 7
3.1.5. (U) Money Laundering Group I UCO Proposals 7
3.2. (U) Money Laundering Transactions Involving Terrorist Organizations 9
3.2.1. (U) Designated Foreign Terrorist Organizations List 9
3.2.2. (U) FBI Policy Regarding Transactions with Terrorist Organizations 9
3.2.3. (U) Potential Exemptions 10
. 3.3. (U) Use of Terrorism Classification and Money Laundering Subclassifications.. 1 1
3.3.1. (U) Terrorism Matters 1 1
3.3.2. (U) Money Laundering Subclassifications 1 1
3.3.3. (U) Cross-Program OC, Gangs and Criminal Enterprise Program (G/CEP)
and Money Laundering Cases Initiation Guidance 1 1
3.3.4. (U) FBIHQ Program Management of Cross-Program OC, G/CEP, and Money
Laundering Investigations 13
3.3.5. (U) Field Office Responsibilities for Reporting Cross-Program Drug/Money
Laundering Investigations 13
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3.4. (U) Foreign UCO Transactions and Covert Bank Accounts . 14
3.4. 1 . (U) Establishing Covert Accounts in a Foreign-Based Financial Institution . 14
3.4.2. (U) FBI Policy Regarding Extraterritorial Activity 15
3.5. (U) interagency Coordination of Money Laundering and the Memorandum of
Understanding (MOU) 15
3.6. (U) Requests Pursuant to the Bank Secrecy Act (BSA) 26
3.6.1. (U) FinCEN 314(a) Requests 26
3.6.2. (U) Egmont Requests from Foreign Financial Institutions 27
4. (U) Procedures and Processes 29
4.1. (U) Money Laundering: Basic Concepts 29
4.1.1. (U) Definition 29
4.1.2. (U) Scope 29
4.1.3. (U) Overview of Money Laundering Statutes 29
4.2. (U) The Money Laundering Process 30
4.3. (U) Money .Laundering Methods 31
4.3.1. (U) Bulk Smuggling, 31 U.S.C. § 5332 31
4.3.2. (U) Stored Value Devices 31
4.3.3. (U) Informal Value Transfer Systems (IVTS) 33
4.3.4. (U) Black Market Peso Exchange (BMPE) 34
4.3.5. (U) Global Financial System 36
4.3.6. (U) Money Services Businesses 39
4.3.7. (U) Corporate Laundering Schemes 40
4.3.8. (U) Digital Currency (E-Currency) 40
4.4. (U) Money Laundering: Conducting Investigations 41
4.5. (U) Initiating Money Laundering Predicated Investigations/Transactions 41-
4.5.1. (U) Traditional or Overt Investigations 41
4.5.2. (U) Sophisticated and Covert Investigative Methods 41
4.5.3. (U) Transactions that Involve the Use of a UCE 43
/ 4.5.4. (U) Investigations/Transactions That Involve the Use of a CHS 44
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4.6. (U) Requesting Exemption for Money Laundering Transactions with Terrorist
Organizations 44
4.7. (U) Submission of 3 14(a) Requests to FinCEN: 44
4.8. (U) Submission of Egmont Requests to FinCEN 45
4.9. (U) Traditional Interviews 45
4.9.1. (U) Non-confrontational 45
4.9.2. (U) Confrontational 46
4.10. (U) Subpoenas 46
4.11. (U) Ex-Parte Orders 46
4.12. (U) Mutual Legal Assistance Treaty and Letters Rogatory 47
4.1 3. (U) Physical Surveillance 48
4.14. (U) Records Checks I.... 48
4.15. (U) Other 48
4.16. (U) Financial Analysis 48
4. 1 .6. 1 . (U) Obtaining and Analyzing Financial Records 49
5. (U) Recordkeeping Requirements 51
5.1 . (U) Statistical Reporting for All Money Laundering Investigations 51
6. (U) Summary of Legal Authorities 52
6. 1 . (U) Primary Money Laundering Statutes 52
6.2. (U) Related Criminal Statutes 52
6.3. (U) Companion Forfeiture Statutes 52
6.4. (U) Federal Regulations 53
List of Appendices
(U) Appendix A: Legal Authorities A-l
(U) Appendix B: FATF Forty Recommendations B-l
(U//FOUO) Appendix C: Memorandum of Understanding Among the Secretary
of the Treasury, the Attorney General, and the Postmaster General Regarding
Money Laundering Investigations C-l
(U) Appendix D: Sources of Additional Information D-l
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(U) Appendix E: Contact Information E-l
(U) Appendix F: Key Words F-l
(U) Appendix G: Acronyms G-l
Table of Figures
Figure 1. (U) Association-Branded Prepaid Cards 33
Figure 2. (U) Basic Hawala 34
Figure 3. (U) Black Market Peso Exchange 36
Figure 4. (U) Use of the Global Financial System to Launder Money 38
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1. (U) Scope
(U) Purpose: This policy implementation guide (PG) provides Federal Bureau of
Investigation (FBI) employees with an understanding of money laundering matters, as
well as guidance on policies and procedures relating to money laundering investigations.
This PG ensures that assessments and predicated investigations comply with the Attorney
General's Guidelines for Domestic FBI Investigations (AGG-Dom), dated
September 29, 2008, and the FBI’s Domestic Investigations and Operations Guide
(DIOG), dated December 16, 2008, or as revised. With knowledge and awareness, the
FBI can more effectively investigate money laundering.
(U) Background: The Asset Forfeiture/Money Laundering Unit (AF/MLU), Financial
Crimes Section (FCS) prepared this PG. The Department of Justice (DOJ) defines money
laundering as the process by which criminals conceal or disguise the proceeds of their
crimes or convert those proceeds into goods and services. Concealment, in any form, is
money laundering. Simply put, money laundering is any knowing use of the proceeds of
criminal activity. Money laundering occurs whenever crime is principally motivated by
financial reward. Criminals naturally conceal or disguise their ill-received gains to avoid
detection.
(U) In November 2001, Congress passed the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, also
known as the USA PATRIOT Act (hereafter the Act). The Act included various
provisions to deter money laundering. These provisions authorized new tools for criminal
investigators and increased criminal penalties. This PG describes these provisions and
outlines the procedures needed to effectively investigate money laundering matters.
(U) Intended Audience: All FBI employees, task force officers (TFO), contract
employees, and other personnel who conduct money laundering investigations or provide
financial or intelligence-based case support on such investigations will use this PG as a
reference.
(U) Link to Corporate Policy Directive 0359D
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2. (U) Roles and Functional Responsibilities
2.1. (U) Asset Forfeiture and Money Laundering Section (AFMLS)
(U) The Asset Forfeiture and Money Laundering Section (AFMLS) of the DOJ provides
centralized management for DOJ’s Asset Forfeiture Program and directs DOJ’s
components in prosecuting money laundering investigations. The AFMLS initiates,
coordinates, and reviews legislative and policy proposals affecting the Asset Forfeiture
Program and money laundering enforcement agencies.
(U) The AFMLS oversees asset forfeiture; money laundering training; and conducts
seminars for federal prosecutors, investigating agents, and law enforcement personnel. It
also produces legal publications and training materials to enhance its legal support
functions. The AFMLS Intranet site is available on the DOJ Intranet at
http ://dojnet. doj .gov/ criminal/afoml/default.htm.
2.2. (U) United States Attorneys (USA)
(U) Money laundering cases can be prosecuted by the United States Attorney’s Office
(USAO) in any district where a financial transaction in furtherance of money laundering
has taken place. Some money laundering cases are prosecuted directly by the AFMLS.
Agents who have evidence that a money laundering transaction has occurred must consult
with a prosecutor to determine if sufficient proof exists to establish all of the elements
required to support a money laundering charge. In order to do so, the agent will have to
establish the following:
1 . (U) The nature of the transaction: Money must go between people, bank accounts,
etc.
2. (U) The source of the funds involved in the transaction: There must be proof that
the money came from a crime that is among the list of money laundering
predicates, also known as specified unlawful activities (SUA).
3. (U) The subject’s knowledge: There must be proof, which is often circumstantial,
that the subject knew the funds were derived from a felony. It is not necessary to
prove that the subject knew anything about the specific crime that the funds
actually came from.
(U) To establish a violation of Title 18 United States Code (U.S.C.) Section (§) 1956,
there must be proof that the subject intended to either conceal the funds or promote the
SUA. To establish a violation of 1 8 U.S.C. § 1957, there must be proof that the subject
transferred an amount greater than $10,000 by or through a financial institution. These
charges are not mutually exclusive and can be charged together where the elements of
both violations are satisfied.
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(U) A USA must approve an indictment. Typically, the USA’s unit chief overseeing
money laundering prosecutions can approve a complaint charging money laundering. The
indictment and the complaint will both serve as charging instruments and either may he
used as the basis for an arrest warrant on money laundering charges.
(U) Furthermore, approval of a USA or the DOJ Criminal Division is required for an FBI
agent or employee to conduct money laundering transactions involving an aggregate
amount exceeding $1 million, unless it is part of a Group I Undercover Operation (UCO).
See AGG-Dom, Section V(C) (3)(f).
2.3. (U) FBI’s Asset Forfeiture/Money Laundering Unit
(U) The mission of the AF/MLU is to promote the strategic use of asset forfeiture and to
ensure that field offices employ money laundering statutes in all appropriate investigations.
The asset forfeiture and money laundering investigative processes identify, target, and
disrupt individuals and criminal and terrorist organizations engaged in fraud schemes that
target our Nation's financial infrastructure. The AF/MLU carries out its mission by:
• (U) Providing support and guidance to field offices on asset forfeiture and money
laundering matters.
• (U) Facilitating proactive predicated investigations by consulting on the
development of money laundering UCOs and by obtaining relevant authorizations.
• (U) Providing training to FBI personnel on the application of asset forfeiture,
money laundering and identity theft statutes, money laundering methods, and
investigative methods.
• (U) Participating in multi-agency working groups to develop strategic solutions to
various crime problems.
• (U) Providing resources, when needed, to support asset identification and
financial analysis for investigations deemed to have significant forfeiture potential.
• (U) Developing initiatives aimed at facilitating field investigations and addressing
crime problems through legislative and regulatory channels.
(U) Agents in the field are to provide regular updates to the AF/MLU on money
laundering investigations and prosecutions. This' enables the AF/MLU to detect new
trends in money laundering so that this information can be collected and disseminated to
the field through the AF/MLU Intranet site and during training.
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2.5. (U) Financial Action Task Force (FATF)
(U) The FATF was established at the 1989 G-7 Summit in Paris. The FATF is an
intergovernmental policy-making body whose purpose is the development and promotion
of national and international laws and regulations to combat money laundering and
terrorist financing.
(U) As of October 2009, 34 countries, including the United States, were FATF members.
Member countries agree to comply with FATF’s "Forty Recommendations" (anti-money
laundering [AML] measures) and to implement the FATF’s recommendations to combat
money laundering. The Forty Recommendations address the criminal justice system and
law enforcement, the financial system and its regulation, and international cooperation.
(U) In 1996 and 2003, the FATF revised the Forty Recommendations to incorporate
changes in money laundering trends and to anticipate potential future threats. The FATF
has also elaborated on various interpretative notes designed to clarify the application of
specific recommendations and to provide additional guidance (see Appendix B of this PG
for a complete list of the Forty Recommendations).
(U) In December 2009, the FATF met in Washington, D.C., to discuss potential revisions
to the Forty Recommendations. Proposals geared towards increased international
cooperation were recommended and formal drafts of these proposals will be submitted at
future FATF meetings.
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3. (U) Policies
3.1. (U) Predicated Investigative Methods and Approval Levels
(U) The intricacies of predicated money laundering investigations, along with their
possible international impact and potential for sensitive issues, necessitate different levels
of review and approval, depending upon the type of investigative methods contemplated.
These investigative methods can be broken down into three primary categories:
(1) traditional/overt investigations, (2) money laundering transactions that involve the use
of an undercover employee (UCE), and (3) money laundering transactions that involve
the use of confidential human sources (CHS).
3.1.1. (U) Traditional or Overt Money Laundering Investigations
(U) Traditional or overt money laundering (predicated) investigations address criminal
activity and the laundering of the proceeds of that activity. These traditional, overt
investigations have proven to be very successful, particularly in white collar crime (WCC)
cases where a group or an individual engages in some SUA and launders the proceeds of
that activity. A traditional investigation may not use the undercover method to conduct
transactions. I I
3.1.2. (U) Money Laundering Transactions That Involve the Use of an
Undercover Employee
(U) Money laundering by an undercover FBI employee, or an employee of another
federal, state, or local law enforcement agency acting at the direction of the FBI, is a
"sensitive circumstance" under the Attorney General's Guidelines on FBI Undercover
Operations (AGG-UCO) when the aggregate amount of money laundering exceeds $1
million dollars, regardless of how many separate instances of money laundering occur.
See Attorney General (AG) Order No. 2955-2008, Section 4 (03/05/2008).
(U) The Assistant Director in Charge (ADIC) or Special Agent in Charge (SAC) of a
field office can approve an undercover operation in which the UCE or CHS conducts
money laundering transactions and the aggregate amount does not exceed $1 million
dollars. See the Field Guide for Undercover and Sensitive Operations (FGUSO).
(U) Under AG Order No. 2955-2008, money laundering by a UCE in a series of more
than five undercover activities constitutes a UCO. If the aggregate amount laundered
does not exceed $1 million dollars, the operation may be approved by an SAC as a Group
II UCO. An undercover contact by a UCE includes any meetings, contacts, or
conversations that could be considered evidentiary, whether conducted by oral, written,
wire, or electronic means. Chance meetings or casual contacts are not generally
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considered evidentiary, but could become evidentiary if there were repeated meetings or
unplanned discussions.
(U) When the aggregate laundering of money exceeds $1 million, the activity is sensitive,
and requires Group I UCO designation and approval from the Criminal Undercover
Operations Review Committee (CUORC) and the Assistant Director (AD), Criminal
Investigative Division (CID). The $ 1 million dollar cap applies to the case, not to each
subject of the investigation.
(U) These rules apply regardless of whether the UCE is injecting government funds into a
criminal money laundering operation or the UCE is laundering illicit funds for the
subjects of the investigation.
(U) When any money laundering UCO receives a Group I UCO designation and has been
approved by the AD of CID, individual transactions may be approved by the SAC up to
the maximum cap approved by the AD, CID.
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does not exceed $1 million dollars. See AGG-Dom, Section V(C)(3)(f), CHSPM. Section
10.2. Furthermore, delegation of SAC authority may be made to an Assistant Special
Agent in Charge (ASAC), pursuant to the DIOG (“Supervisory Roles and
Responsibilities”). In addition to the approvals stated in 3.1.2, use of a CHS to engage in
money laundering transactions over $1 million dollars requires approval from a United
States Attorney or the DOJ Criminal Division.
(U) Operational FBI Headquarters (FBIHQ) unit involvement is necessary to coordinate
individual investigations worldwide and eliminate any possibility that the FBI and/or
other federal law enforcement agencies are unwittingly laundering money for one another.
Accordingly, notification of planned money laundering activity by a CHS must be
provided to the AF/MLU as soon as practicable. It must be noted that FBIHQ
concurrence does not eliminate the need for the SAC to personally authorize the CHS’s
engagement in otherwise illegal activity (e.g., money laundering).
(U) NOTE: A money laundering investigation using a CHS instead of a UCE to facilitate
ithe money laundering transactions, will, as a matter of FBI policy, be treated the same as
if it were a Group I UCO if the amount being laundered exceeds $1 million. As a result,
the CUORC process will be required in such cases.
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3.1.4. (U) Providing FBIHQ Notification
(U) Field offices must advise AF/MLU and any other appropriate FBIHQ operational unit
prior to, or as soon as practicable after, engaging in money laundering transactions
outside of a Group I or Group II UCO. This applies to transactions involving either CHSs
or UCEs. This may he done telephonically by the case agent, but must be followed by an
electronic communication (EC) so that the information can be uploaded and indexed. The
following issues must be addressed in the EC:
• (U) The background and objectives of the investigation.
• (U) The details of the proposed transaction(s), amount to be laundered, identity of
the subjects, bank accounts to be used (if known), and the number and total
amount of all previously approved transactions.
• (U) If the money is to be invested, how it will be segregated to avoid the
commingling of funds and potential harm to third parties.
• (U) The prosecutive opinion of the Assistant United States Attorney (AUSA), if
applicable.
• (U) The concurrence of the SAC, which may be delegated in writing to the AS AC.
3.1.5. (U) Money Laundering Group I UCO Proposals
(U) Money laundering Group I UCO proposals must be submitted to the operational
section at FBIHQ that has program responsibility for the underlying criminal activity. For
example, a money laundering Group I UCO proposal where the proceeds to be laundered
are derived from a bank fraud must be submitted to the appropriate operational desk; a
Colombian drug money laundering Group I UCO proposal must be submitted to die
Organized Crime (OC)/Drug Section. The UCO proposal must follow the guidelines
established in the FGUSO, the AGG-UCO, and die DIOG. In addition, money laundering
UCO proposals must include a detailed explanation of the proposed money laundering
methods, such as the use of any domestic or foreign business, bank account, or financial
institution. If it is anticipated that the UCO will involve international activity, the need
for cooperation of foreign law enforcement, or the involvement of foreign government
officials, the comments of the appropriate legal attachd (Legat), and IOD must be
solicited before the UCO proposal is submitted to the CUORC. The use of investments in
the money laundering process, and how the funds are to be segregated to avoid
commingling and potential harm to innocent third parties, must be sufficiently explained.
(U) All Group I UCd |
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(U) It is the responsibility of the field office to monitor the amount of funds laundered.
Once the cap is reached, all money laundering activity must cease, pending review by
FBIHQ. Field offices are expected to anticipate the need for FBIHQ authority to exceed
the cap. In these instances, a supplementary EC requesting authority to raise the cap must
be submitted to the operational section at FBIHQ, with one copy to the Undercover and
Sensitive Operations Unit (USOU). Field offices must anticipate at least 30 days for
requests to be reviewed by the CUORC and approved by the AD, CID. An EC requesting
authority must include the following information:
1 . (U) An update and summary of the investigation conducted since the initial Group
I UCO presentation.
2. (U) Any accomplishments or progress made in achieving the objectives stated in
the initial Group I UCO proposal.
3. (U) An explanation of the proposed money laundering activity if it differs from
the initial proposal.
4. (U) The necessity for continued money laundering activity (e.g., anticipated
accomplishments or specific objectives for the proposed activity).
5. (U) The legal opinion of the USA.
6. (U) The concurrence of the SAC.
(U) Requests for renewal of UCO authority (additional six-month authority) must
continue to be submitted pursuant to the FGUSO.
(U) Once a Group I UCO has been reviewed by the CUORC and approved by the AD,
CID, individual money laundering transactions within the established cap may be
approved by the SSA. A change in the focus of a UCO or a major change in the proposed
money laundering activity requires that a supplementary proposal be submitted to the
CUORC and approved by the AD, CID.
3. 1.5.1. (U) Additional Reporting Requirements
(U) Proper coordination of individual money laundering investigations is necessary to
eliminate any possibility that agencies are unwittingly laundering money for themselves
or each other. Therefore, field offices must notify FBIHQ by EC after each money
laundering transaction where government agents, or persons operating at their direction,
launder funds derived from unlawful activity or launder government funds pursuant to
18 U.S.C. § 1956(a)(3). Notification must be made as soon as possible, but no later than
15 calendar days after the transaction. The brief EC must include the time, date, and
location of the money laundering, as well as the amount laundered. The EC must be sent
to the operational CID unit responsible for the violation and the AF/MLU, CID. If the
case agent is not certain that the EC will reach the AF/MLU within 15 calendar days, a
summary e-mail must be sent in advance of the EC.
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3.2. (U) Money Laundering Transactions Involving Terrorist Organizations
(U) Even the smallest amount of money in the hands of an international or domestic
terrorist organization could have devastating consequences. The FBI must ensure that it
does not support the terrorist organizations that the United States and its allies are
attempting to dismantle.
3.2.1. (U) Designated Foreign Terrorist Organizations List
(U) Since 1 997, the U.S. Department of State (DOS) has maintained the list of Foreign
Terrorist Organizations (FTO) which identifies FTOs that have demonstrated a capability
and/or willingness to engage in terrorist methods to threaten U.S. national security
interests. These methods include attacks on U.S. nationals; American national defense;
and military, diplomatic, and economic interests. The fact that an organization is
designated on the FTO list provides the legal authority to investigate and prosecute U.S.
citizens or foreign nationals within the United States for financially, ideologically, or
logistically aiding any designated FTO. Certain members or representatives of an FTO on
the list can be denied entry to the United States through visa rejection or other means.
Pursuant to Executive Order (EO) 13244, the United States can compel U.S. financial
institutions to freeze any assets linked to an FTO and report them to the United States
D epartment of the Treasury (PQTO.
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3.2.2. (U) FBI Policy Regarding Transactions with Terrorist Organizations
(U) Absent an exemption, this PG prohibits money laundering transactions of any type
between a UCE or government CHS and any individual or group engaged in international
or domestic terrorism and/or any organization designated by the United States
Government (USG) or its allies as an FTO, where the funds laundered are to be delivered
to the individual or group.
(U) Absent an exemption, this PG prohibits transactions involving a country designated
by the USG as a "state sponsor of terrorism."
(U) Absent an exemption, this PG prohibits transactions involving individuals and groups
engaged in international and/or domestic terrorism as defined in 18 U.S.C. § 2331.
(U) This general prohibition does not apply to money laundering stings or other
operations where the funds are recovered by the FBI at the time of delivery or within a
specified short time.
if
(U) Transfers of material goodq are not covered by
this policy. Responsibility for overall compliance with the aforementioned policy rests
with the requesting field office. Close coordination with FBIHQ is necessary to make
sure that this policy is not violated. The policy applies to facilitation cases,
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3.2.2.I. (U) Facilitation
(U) Facilitation, when used in the context of money laundering, indicates assistance
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or criminal groups are often criticized for facilitating the criminal activity. The degree to
which agents facilitate criminal activity must be strongly considered by individual SSAs
when the FBI engages in money laundering for an individual or a criminal enterprise.
Consequently, the specific goals and objectives of the overall investigation must
incorporate a plan for these money laundering transactions. SSAs must evaluate the
investigative benefits obtained (e.g., probable cause for Title III or search warrant) from
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3.2.3. (U) Potential Exemptions
(U) This policy anticipates some instances where conducting a money laundering
transaction with a terrorist organization, designated or not, could be allowed. The
cost/benefit analysis must be articulated to the highest levels of FBIHQ. A field office
must conduct a risk assessment to include estimated risks to U.S. citizens and other third
parties. In addition, the field office must detail the investigative need for the transaction
and the reasons why other investigative measures are insufficient. The office must also
have authority for the UCE or CHS to engage in the money laundering, material support,
conspiracy, structuring, bulk cash smuggling, and any other offenses relevant to the
operation. The only way such an investigation can be authorized is with the approval of
the Director and the Assistant Attorney General for National Security: See AGG-Dom,
Section V(C)(3).
(U) If the proposed money laundering transaction involves funds of a designated terrorist
organization (DTO) rather than FBI funds, and the Department of the Treasury, Office of
Foreign Assets Control (OF AC) has issued an order to financial institutions to block
financial transactions involving such assets pursuant to 8 U.S.C. §1189, then: (1) OF AC
must concur with the money laundering transaction, and/or (2) the Attorney General must
authorize the illegal activity in violation of the OF AC order, and (3) the Director or his
designee must personally approve the transaction.
(U) In order to request an exception/exemption, the field office must submit an EC to the
appropriate operational unit at FBIHQ, the AF/MLU, and the Terrorist Financing
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provided by the FBI or other law enforcement officials to an individual or criminal
enterprise in support of some underlying criminal activity .
JCEs who launder the funds generated by individuals
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Operations Section (TFOS). The operational unit drafts the appropriate approval
communications for signature by the Director or his designee.
3.3. (U) Use of Terrorism Classification and Money Laundering
Subclassifications
3.3.1. (U) Terrorism Matters
(U) If a field division opens a criminal investigation with subjects havi ng po ssible or
confirmed ties to terrorism, the investigation must be opened under the nvestigative
classification. Informational copies of the communications that relate to money
laundering must be provided to the AF/MLU by the case agent simultaneously, with the
case opening.
3.3.2. (U) Money Laundering Subclassifications
(U) FBIHQ has noted a substantial increase in the number of money laundering
investigations that target criminal enterprises whose principal activity is laundering the
illicit proceeds of specified unlawful activities. Money laundering investigations may be
opened under the 272 classification. In order to accurately reflect the underlying nature of
investigations within the 272 classification, the following subclassifications have been
established:
• (U) 272A - Money Laundering - Organized Crime
• (U) 272B - Money Laundering - White Collar Crime Matters
• (U) 272C - Money Laundering - Violent Crimes Major Offenders (VCMO) Matters
• (U) 272D - Money Laundering - Unknown Specified Unlawful Activity (USUA)
• (U) 272E - Money Laundering - Targeting Industries or Facilities
• (U) 272F - Money Laundering - Drugs
3.3.3. (XT) Cross-Program OC, Gangs and Criminal Enterprise Program (G/CEP)
and Money Laundering Cases Initiation Guidance
(U) Prior to the initiation of any organized crime or drug investigation that involves
potential money laundering charges, field office OC, drug, and/or money laundering
SSAs must review the circumstances of the planned investigation to determine its focus
and apply the following criteria:
• (U) If the target of the investigation is a drug trafficking organization linked to the
Consolidated Priority Organization Targets (CPOT) list or other identified
significant drug trafficking organization, and the objective of the investigation is to
dismantle the drug trafficking organization. The investigation must then be initiated
under the 281/245 (B, C, F, or I) classification, even though money laundering
methods are being used to target and dismantle the organization.
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(U) If the target of the investigation is an organized criminal enterprise linked to the
OC threat list or another identified significant organized criminal enterprise, and
the objective of the investigation is to dismantle the organized criminal enterprise,
then the investigation must be initiated under the appropriate OC classification
even though money laundering techniques are being used to target and dismantle
the organization.
(U) If the target of the investigation is a money laundering industry and/or facility
and the objective is to disrupt and dismantle the money laundering entity, the
investigation must be initiated under the appropriate 272 classification.
(U) If a dmg nexus to the investigation exists (e.g., drug traffickers of unknown
significance using the industry/facility to launder drug proceeds), the investigation
may appropriately be opened under the 272F classification.
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3.3.4. (U) FBIHQ Program Management of Cross-Program OC, G/CEP, and
Money Laundering Investigations
(U) Program management responsibility for 272A and 272F money laundering
investigations remains with the AF/MLU, Financial Crimes Section, CED. However, in
order to maximize the use of the enterprise theory of investigating these violations, it is
required that 272A and 272F investigations meet the criteria established for OC and
G/CEP investigations, respectively. See the DIOG for enterprise investigation case
initiation criteria. Additionally, OC-related or C/CEP investigations may have added
reporting or notification requirements. Therefore, their respective PGs or policy guidance
must be consulted prior to initiating a 272A or 272F.
(U) When the AF/MLU receives an opening communication for a 272A or 272F matter,
it solicits the concurrence of the appropriate OC or Drug Section operational unit to
ensure the investigation is an appropriate use of OC or Drug Program resources. The
AF/MLU also ensures the investigation meets the appropriate OC or drug case initiation
criteria. The AF/MLU coordinates with the appropriate OC or drug operational units
regarding significant developments during the investigation and ensures that copies of all
case communications are provided.
(U) When OC or Drug Program operational units receive an opening communication for
an OC or drug matter that has a money laundering component, they review the opening
communication to ensure the matter is properly classified and then notify the AF/MLU
that an investigation using money laundering techniques has been opened. The OC and
drug operational units coordinate with the AF/MLU regarding significant developments
such as arrests, indictments, convictions, or searches and seizures during the course of the
investigation and ensure that copies of all case communications are provided to AF/MLU.
3.3.5. (U) Field Office Responsibilities for Reporting Cross-Program
Drug/Money Laundering Investigations
(U) Organized crime, drug, and money laundering program supervisors must ensure that
all communications to FBIHQ related to these cross-program investigations are addressed
to both the appropriate G/CEP unit and the AF/MLU.
(U) Accordingly, field offices are required to address copies of all future 272A and 272F
communications to the appropriate OC and G/CEP units. Field offices must also forward
copies of all organized crime and drug matter communications to the AF/MLU when the
investigations entail a money laundering component.
(U) Moreover, case agents will coordinate the money laundering components of
organized crime and drug investigations with the Special Operations Division (SOD).
SOD provides useful database searches and ensures that all such investigations are
coordinated with the Drug Enforcement Administration (DEA) and the U.S. Bureau of
Immigrations and Customs Enforcement (ICE).
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(U) If a matter is opened under the 272 classification and the target of the investigation is
a public figure, or if any other sensitive investigative matter (SIM) is involved, the rules
and reporting requirements set forth in the DIOG, Section 10 will apply.
(U) The program management responsibility for the FBI’s Money Laundering Program
remains within the AF/MLU, FCS, CUD.
3.4. (U) Foreign UCO Transactions and Covert Bank Accounts
3.4.1. (U) Establishing Covert Accounts in a Foreign-Based Financial Institution
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3.4.2. (U) FBI Policy Regarding Extraterritorial Activity
3.5. (U) Interagency Coordination of Money Laundering and the Memorandum
of Understanding (MOU)
(U) The DOJ, the DOT, and the United States Postal Service (USPS) have entered into a
Memorandum of Understanding that delineates the responsibilities for the various
agencies for enforcing the money laundering statutes. This MOU, which is set forth
in Appendix C of this PG, became effective on August 16, 1990. Under the MOU, the
FBI maintains its existing broad jurisdiction in money laundering issues, domestically
and internationally. The MOU does not restrict the FBI's money laundering investigative
efforts, and it does not require the FBI to turn over any money laundering investigation to
another federal, state, or local law enforcement agency, either domestically or
internationally. The MOU sets forth the jurisdiction, notice, coordination, and other
requirements for the involved agencies that have responsibilities for investigating
violations of Title 18, namely, the FBI, DEA, ICE, Internal Revenue Service (IRS),
United States Secret Service (USSS), Environmental Protection Agency (EPA), Bureau
of Alcohol, Tobacco, Firearms, and Explosives (ATF), and the USPS. The FBI has
investigatory jurisdiction, in general, over SUAs relating to its existing jurisdiction (e.g.,
drugs, terrorism, WCC, violent crimes, and foreign counterintelligence).
(U) The investigatory jurisdiction of the FBI, DEA, ICE, USSS, ATF, and the USPS is
determined by the specific SUAs involved. A list of these SUAs is set forth below
followed by the abbreviated name of the agency or agencies having money laundering
jurisdiction for that SUA:
• (U) An offense against a foreign nation involving the manufacture, importation,
sale, or distribution of a controlled substance, where at least one financial
transaction, or part of a financial transaction, takes place in the United States (FBI,
DEA).
• (U) Any act or acts constituting a continuing criminal enterprise (21 U.S.C. § 848)
(FBI, DEA, USPS).
• (U) An offense under the following:^
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Citation
SU A/Offense
Investigatory Jurisdiction
15U.S.C. §§ 78dd-2;
78dd-3
Relating to bribery of foreign
officials (Foreign Corrupt
Practices Act).
FBI
•
18U.S.C. § 152
Relating to concealment of
assets; false oaths and claims;
and bribery.
FBI
18U.S.C. §215
Relating to commissions or
gifts for procuring loans.
FBI
18U.S.C. §§ 500 -503
Relating to certain
counterfeiting offenses.
USSS, USPS*
*The jurisdiction of USPS under
this SUA involves counterfeiting
of money orders, postcards, indicia
of postage, and postmarking
stamps.
18U.S.C. §513
Relating to securities of states
and private entities.
FBI
18U.S.C. §542
Relating to entry of goods by
means of false statements.
ICE
18U.S.C. §545
Relating to smuggling goods
into the United States.
ICE
18U.S.C. § 549
Relating to removing goods
fronvICE custody.
ICE
18U.S.C. §641
Relating to public money,
property, or records.
FBI, USPS
18U.S.C. §656
Relating to theft,
embezzlement, or
misapplication by a bank
officer or employee.
FBI
18U.S.C. §657
Relating to lending, credit, and
insurance institutions.
FBI, USSS*.
*The jurisdiction of USSS under
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Citation
SUA/Offense
Investigatory Jurisdiction
this SUA involves theft,
embezzlement, or misapplication
by employees of the Federal
Deposit Insurance Corporation
(FDIC).
18U.S.C. §658
Relating to property mortgaged
or pledged to farm credit
agencies.
FBI
18U.S.C. § 666
Relating to theft or bribery
concerning programs receiving
federal funds.
FBI
18U.S.C. §§ 793,794, or
798
Relating to espionage.
FBI
18.U.S.C. § 875
Relating to interstate
communications.
FBI
18U.S.C. § 1005
Relating to bank fraud and
embezzlement.
FBI
18U.S.C. § 1006
Relating to fraudulent credit
institution entries.
FBI
18U.S.C. § 1007
Relating to bank fraud and
embezzlement.
FBI
18U.S.C. § 1014
Relating to fraudulent loan or
credit applications.
FBI
18U.S.C. § 1032
Relating to concealment of
assets from a financial
institution.
FBI
18U.S.C. § 1201
Relating to kidnapping.
FBI
18U.S.C. § 1203
Relating to hostage taking.
FBI
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Citation
SUA/Offense
Investigatory Jurisdiction
18U.S.C. § 1341
Relating to frauds and
swindles against financial
institutions involving mail.
FBI
18U.S.C.§ 1343
Relating to wire fraud
affecting a financial institution.
FBI
18U.S.C. § 1344
Relating to financial institution
fraud. .
FBI
18 U.S.C. §§ 2113 or
2114
Relating to bank and postal
robbery and theft.
FBI, USPS
FBI and USPS share money
laundering jurisdiction regarding
the Section 21 14 - SUA.
18 U.S.C. §§2251,
2251 A, 2252, and 2258
Relating to sexual exploitation
of children.
FBI, ICE*
*The jurisdiction of ICE under this
SUA involves the importation or
exportation of material involving
the sexual exploitation of children.
18 U.S.C. §2319
Relating to copyright
infringement.
FBI
18 U.S.C. § 2320
Relating to trafficking in
counterfeit goods or services.
FBI
19 U.S.C. § 1590
Relating to aviation
smuggling.
ICE
21 U.S.C. § 830
Relating to precursor and
essential chemicals.
FBI, DEA
21 U.S.C. § 863
Relating to transportation of
drug paraphernalia.
FBI, DEA, ICE*, USPS
*The jurisdiction of ICE under this
SUA involves the illegal
importation or exportation of drug
paraphernalia.
22 U.S.C. § 61 1 et seq.
Relating to the registration of
United States Attorney General
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Citation SUA/Offense Investigatory Jurisdiction
foreign officials (Foreign (USAG)
Agents Registration Act).
Section 15 of the Food Relating to Food Stamp Fraud FBI
Stamp Act of 1 977 involving a quantity of
(Public Law [P.L.] coupons having a value of not
95-113) less than $5,000.
Section 38(c) of the Relating to criminal violations. ICE*, ATF**
Arms Export Control Act *The jurisdiction of ICE under this
(22 U.S.C. § 2778) SUA involves exportation, in
transit, temporary import, or
temporary export transactions.
**TTie jurisdiction of ATF under
this SUA involves the importation
of items on the U.S. Munitions
Import List, except those relating
to exportation, in transit,
temporary import, or temporary
export transactions.
50 U.S.C. App.§ 2410
Relating to violations of the
Export Administration Act of
1979.
ICE
50 U.S.C. § 1705
Relating to penalties of the
International Emergency
Economic Powers Act.
ICE
50 U.S.C. App. § 16
Relating to offenses and
punishment of the Trading
with the Enemy Act.
ICE
33 U.S.C. § 1251 etseq.
Felony offenses relating to the
discharge of pollutants into the
Nation's waters.
FBI, EPA
33 U.S.C. § 1401 et seq.
Felony offenses relating to the
dumping of materials into
ocean waters.
FBI, EPA
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Citation
SUA/Offense
Investigatory Jurisdiction
33 U.S.C. § 1901 et.seq.
Felony offenses relating to the
discharge of pollutants from
ships.
FBI, EPA
42 U.S.C. § 300f et seq.
Felony offenses relating to the
safety of public water systems.
FBI, EPA
42 U.S.C. § 6901 et seq.
Felony offenses relating to
resource conservation and
recovery.
FBI, EPA
(U) Any act or activity constituting one of the predicate offenses to the Racketeer
Influenced and Corrupt Organizations (RICO) Act (18 U.S.C. § 1961(1)). These offenses
are as follows:
• (U) Offense 1: Any act or threat involving:
SUA/Offense
Investigatory Jurisdiction
Murder
FBI
Kidnapping
FBI
Gambling
FBI
Arson
FBI, ATF
Robbery
FBI
Bribery
FBI
Extortion
FBI .
Dealing in obscene matter
FBI
Dealing in a controlled substance or listed
chemical, which is chargeable as a state felony.
FBI, DEA, USPS
• (U) Offense 2: Any act which is indictable under any of the following:
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Citation
SUA/Offense
Investigatory
Jurisdiction
18U.S.C. §201
Relating to bribery.
FBI, USPS
18U.S.C. §224
Relating to sports bribery.
FBI
18U.S.C. §§471,472,
and 473
Relating to counterfeiting.
usss
18U.S.C. §659
Relating to theft from an
interstate shipment.
If the act indictable
under § 659 is felonious,
FBI and ICE*.
*The jurisdiction of ICE
under this SUA involves
theft from foreign
shipment.
18U.S.C. §664
Relating to embezzlement
from pension and welfare
funds.
FBI
18 U.S.C.§§ 891-894
Relating to extortionate credit
transactions.
FBI
18 U.S.C. § 1028
Relating to fraud and related
activity in connection with
identification documents.
If the act indictable
under §1028 was
committed for the
purpose of financial
gain, FBI and USSS.
18U.S.C. § 1029
!
Relating to fraud and related
activity in connection with
access devices.
FBI, USSS, USPS
18 U.S.C. § 1084
Relating to the transmission
of gambling information.
FBI
18 U.S.C. §§ 1341, 1343
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Citation SUA/Offense Investigatory
Jurisdiction
laundering jurisdiction
with the FBI when the
primary focus of the
offense is mail fraud.
18U.S.C. § 1344
Relating to financial
institution fraud.
FBI
18 U.S.C. §§ 1425-1427
Relating to immigration
fraud.
ICE, FBI
18U.S.C. §§ 1461-1465
Relating to obscene matter.
FBI, ICE*, USPS**
*The jurisdiction of ICE
under this SUA involves
§§ 1461-63 and 1465
relating to illegal
importation or
18U.S.C. §§ 1461-1465
Relating to obscene matter.
exportation of obscene
matter.
**The jurisdiction of
USPS under this SUA
involves §§1461 and
1463 regarding mailing
of obscene matter.
18U.S.C. § 1503
Relating to obstruction of
justice.
FBI, USPS
18U.S.C. § 1510
Relating to obstruction of
criminal investigations.
FBI, USPS
18U.S.C. § 1511
Relating to the obstruction of
state or local law
enforcement.
FBI, USPS
18U.S.C. § 1512
Relating to tampering with a
witness, victim, or an
informant.
FBI, USPS
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Citation
SUA/Offense
Investigatory
Jurisdiction
18U.S.C. § 1513
Relating to retaliating against
a witness, victim, or an
informant.
FBI, USPS
18U.S.C. § 1542
Relating to false statements in
the application and use of a
passport.
FBI - If the act
indictable under § 1 542
was committed for the
purpose of financial
gain.
18U.S.C. § 1543
Relating to forgery or the
false use of a passport.
FBI - If the act
indictable under § 1543
was committed for the
purpose of financial
gain.
18U.S.C. § 1544
Relating to misuse of a
passport.
FBI - If the act
indictable under § 1544
was committed for the
purpose of financial
gain.
18U.S.C. § 1546
Relating to fraud and misuse
of visas, permits, and other
documents.
FBI - If the act
indictable under § 1546
was committed for the
purpose of financial
gain.
18U.S.C. §§ 1581-1588
Relating to peonage,
servitude, and slavery.
FBI
18U.S.C. § 1951
Relating to interference with
commerce, robbery, or
extortion.
FBI
18U.S.C. § 1952
Relating to racketeering.
FBI, ATF*, USPS**
*The jurisdiction of
ATF under this SUA
involves traveling in
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Citation SUAVOffense Investigatory
Jurisdiction
interstate commerce
with respect to arson
and to liquor on which
federal excise tax has
not been paid. **The
jurisdiction of USPS
under this SUA involves
mailing in aid of
racketeering enterprises.
18 U.S.C. § 1953 Relating to interstate FBI
transportation of wagering
paraphernalia.
18 U.S.C. § 1954 Relating to unlawful welfare FBI
fund payments.
18 U.S.C. § 1955 Relating to the prohibition of FBI
illegal gambling business.
18 U.S.C. § 1956 Relating to laundering of FBI
monetary instruments.
18 U.S.C. § 1957 Relating to engaging in FBI
monetary transactions in
property derived from SUA.
18 U.S.C. § 1958 Relating to use of interstate FBI
commerce facilities in the
commission of murder-for-
hire,
18 U.S.C. §§2251, Relating to sexual FBI, ICE*
2251 A, 2252, and 2260 exploitation of children. *The jurisdiction of ICE
under this SUA involves
the importation or
exportation of material
involving the sexual
exploitation of children.
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Citation
SUA/Offense
Investigatory
Jurisdiction
18U.S.C. §§2312 and
2313
Relating to interstate
transportation of stolen motor
vehicles.
FBI
18 U.S.C. § 2314 and
2315
Relating to interstate
transportation of stolen
property.
FBI,. ICE*
*The jurisdiction of ICE
under this SUA involves
foreign transportation of
stolen property.
18 U.S.C. §§2318-2320
Relating to copyright
infringement and counterfeit
goods.
FBI
18 U.S.C. §2321
Relating to trafficking in
certain motor vehicles or
vehicle parts.
FBI, ICE*
*The jurisdiction of ICE
under this SUA involves
importation or
exportation of certain
motor vehicles or
vehicle parts.
18 U.S.C. §§2341-2346
Relating to trafficking in
contraband cigarettes.
ATF
18 U.S.C. §§2421-2424
Relating to white slave
i traffic.
1
FBI
• (U) Offense 3: Any act which is indictable under:
Citation SUA/Offense Investigatory
Jurisdiction
29U.S.C. §186 Dealing with restrictions on FBI
payments and loans to labor
organizations.
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29 U.S.C. § 501(c)
Relating to embezzlement
FBI
from union funds.
• (U) Offense 4: Any offense involving fraud connected with a case under Title 1 1 ,
fraud in the sale of securities, or the felonious manufacture, importation, receiving,
concealment, buying, selling, or otherwise dealing in a controlled substance or listed
chemical (as defined in Section 102 of the Controlled Substances Act), punishable
under any law of the United States (FBI).
• (U) Offense 5: Any act which is indictable under the Currency and Foreign
Transactions Act.
• (U) Offense 6: Any act which is indictable under the Immigration and Naturalization
Act, Section 274 (relating to bringing in or harboring certain aliens); Section 277
(relating to aiding or assisting certain aliens to enter the United States); or Section 278
(relating to importation of alien for immoral purpose) if the act indictable under such
section of the Immigration and Naturalization Act was committed for the purpose of
financial gain.
• (U) Offense 7: Any act that is indictable under any provision listed in 18 U.S.C.
§ 2332b (g)(5)(B).
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(U) The Egmont Group is an international network of over 100 countries that have
implemented national centers to collect information on suspicious or unusual financial
activity from the financial industry, analyze the data, and make it available to appropriate
national authorities for use in combating money laundering, terrorist funding, and other
financial crimes. The representing authority of each country is kn own as a Financial
Intelligence Unit (FIU). In the United States and Egmont is the
representative.
(U) The exchange of information is central to the Egmont Group. The two documents
“Principals for Information Exchange” (June 2001) and “Best Practices for the Exchange
of Information” (updated June 2004) have been adopted to enhance information exchange
and to provide guidelines in terms of best practices for the exchange of information
between FIUs.
(U) The principles provide, in part, that FIUs should be able to exchange information
freely with other FIUs based on reciprocity or mutual agreement and consistent with
procedures understood by the requested and requesting persons. Furthermore, the Egmont
members have agreed that information exchanged between FIUs may be used only for the
purpose for which the information was sought or provided. The requesting FIU may not
transfer information shared by a disclosing FIU to a third party, nor make use of the
information in' an administrative, investigative, prosecutorial, or judicial purpose without
the prior consent of the FIU that disclosed the information.
(U) The Egmont Group members have agreed that all information exchanged by FIUs
must be subject to strict controls and safeguards to ensure that it is used only in an
authorized manner, consistent with national provisions on privacy and data protection.
(U) Money laundering and terrorist financing are international issues that can only be
effectively addressed through international cooperation and coordination, to which the
Egmont Group is firmly committed.
(U) At a minimum, each FIU collects information from Suspicious Activity Reports
(SARj from its financial institutions. Other sources of information the FIU maintains (or fo 7 fc
to which it has access) may vary.
(U) Details regarding the submission of Egmont requests can be found on the
CID, | |
(U) It must be noted that information obtained through the Egmont Group will be used
for lead value only. The records received cannot be used as evidence in any court or
grand jury proceeding. If records are needed later in these more official settings, copies
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must be requested through formal channels such as Mutual Legal Assistance Treaties
(MLAT) or Letters Rogatory.
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4. (U) Procedures and Processes
4.1. (U) Money Laundering: Basic Concepts
4.1.1. (U) Definition
(U) Money laundering is defined by DOJ as the process by which criminals conceal or
disguise the proceeds of their crimes or convert those proceeds into goods and services. It
allows criminals to infuse their illegal money into the stream of commerce, thus corrupting
financial institutions and the money supply, and giving criminals unwarranted economic
power. While many definitions for money laundering exist, it can be thought of more simply
as any knowing use of the proceeds of criminal activity.
4.1.2. (U) Scope
(U) Money laundering is usually associated with any criminal act in which illicit funds are
derived. This includes, but is not limited to, bank fraud, insurance fraud, mortgage fraud,
health care fraud, securities/commodities frauds, advanced fee schemes, high yield and
prime bank note schemes, Ponzi schemes, government fraud, corporate and occupational
frauds, cyber crimes, public corruption, drugs, organized crime, and the financing of
terrorism. Money laundering differs from other types of criminal acts in that it is not a
stand-alone crime. The laundering of funds is typically a secondary criminal act that only
has meaning in the context of another underlying crime. Without proceeds from an
underlying crime, there can be no money laundering.
(U) There is one exception to this rule. Under 18 U.S.C. § 1956 (a)(2)(A), otherwise known
as the International Transfer Provision, when legitimate funds are sent into or out of the
United States from/to an international venue for the purpose of committing a crime, the
transaction constitutes money laundering. In such a scenario, the funds being laundered do
not represent proceeds from a criminal act, but rather funds intended to be used for a
criminal act.
4.1.3. (U) Overview of Money Laundering Statutes
(U) There are two primary money laundering statutes in 18 U.S.C. §§1956 and 1957.
Section 1 956 has four basic statutory elements that must be addressed in criminal
complaints and indictments:
1 . (U) A financial transaction or attempted financial transaction must have taken place.
2. (U) The transaction must involve proceeds from a specified unlawful activity.
3. (U) The subject(s) must have had knowledge that the proceeds were derived from
some form of criminal activity.
4. (U) The subject(s) must have acted with specific intent to do one or more of the
following:
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• (U) Promote a specified unlawful activity.
• (U) Avoid transaction reporting requirements.
• (U) Conceal or disguise the source of the proceeds.
• (U) Evade taxes.
(U) (The word PACE can be used as a mnemonic to recall these specific intent types.)
(U) Because of the requirement to prove specific intent, 18 U.S.C. § 1956 is often called the
“specific intent” statute.
(U) Section 1956 is broken up into three major components:
1 . (U) The financial transaction provision, which addresses domestic transactions.
2. (U) The international transfer provision, which relates to international transactions.
3. (U) The sting provision, which is used in conjunction with undercover operations.
(U) Section 1957 is often called the "spending statute" because it does not require proof of
specific intent. Therefore, simply disposing of illegal proceeds can be considered money
laundering. However, to prosecute an individual for an 18 U.S.C. § 1957 violation, the
transaction must have been in an amount greater than $ 1 0,000.
(U) For a more detailed discussion regarding 18 U.S.C. §§ 1956 and 1957 and other related
statutes, refer to “ Appendix A: Legal Authorities. ” of this PG.
4.2. (U) The Money Laundering Process
(U) There are three steps in the money laundering process: placement, layering, and
integration. The initial parting with, or disbursement of, these funds is known as placement.
The funds may be used to finance bank or brokerage accounts, rent safe deposit boxes,
purchase insurance contracts, gamble, of simply purchase products and services. The
greatest risk of detection exists during the placement phase.
(U) The second phase of the process, layering, involves separating the illicit funds from
their original source through a series of financial transactions to create a complex web of
transactions designed to hinder law enforcement. An example of layering is the transfer of
illicit funds from one bank account to others held in different names. It is common for such
accounts to exist at different banks domiciled in foreign jurisdictions. Shell companies and
nominee accounts may be used to provide an additional layer of anonymity.
(U) The integration phase is the third and final stage of the money laundering process.
Integration occurs when the illicit funds have been seemingly “cleaned” and are ready to be
used to purchase legitimate assets such as homes, boats, vehicles, and jewelry. Laundered
funds may end up in semi-legitimate businesses where they are commingled with
legitimately derived earnings. Such transactions often create significant opportunities for
forfeiture.
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4.3. (U) Money Laundering Methods
(U) Tlte number and variety of methods used by criminals to launder money render it
impossible to provide a complete listing. The means to launder money is limited only by the
creativity and ability of the launderers themselves. However, some methods commonly
observed by law enforcement warrant attention in this section.
4.3.1. (U) Bulk Smuggling, 31 U.S.C. § 5332
(U) Bulk smuggling of cash or monetary instruments is the physical movement of cash or
monetary instruments across international borders.
4.3.1. 1. (U) Cash Smuggling
(U) Criminals use various methods to attempt to transport illicit cash out of the United
States. Such methods include express packages, private aircraft or boats, commercial
shipments, luggage, and vehicles - often concealing money in hidden compartments. The
U.S./Mexican border is particularly vulnerable to bulk cash smuggling where ICE officials
regularly disrupt smuggling attempts.
(U) Large volumes of cash can be difficult for smugglers to conceal. For example, $1
million in $20 bills weighs approximately 100 pounds and would be stacked approximately
1 8 feet high. Therefore, launderers find more efficient ways of moving currency out of the
United States, such as exchanging smaller bills for larger denominations of either U.S. or
foreign currency, using stored value cards (SVC), informal value transfer systems, the black
market peso exchange, the global financial system, or money services businesses (MSB).
4.3.12. (U) Smuggling of Monetary Instruments
(U) Illicit proceeds are not always in the form of cash. Other types of monetary instruments
may be smuggled, including cashier’s checks, traveler’s checks, stocks, bonds, or
certificates of deposit.
4.3.2. (U) Stoked Value Devices
(U) Stored value devices include cards that can store money or value for future use. These
come in various forms, including:
• (U) Smart cards.
• (U) Gift cards.
• (U) Prepaid debit cards.
(U) Smart cards are prepaid and keep track of balances directly on the card through
computer chips or other technology. Transaction and balance information are not maintained
by the issuer or other third party. If the card is lost or stolen, the original purchaser cannot
recover the card value, and the card can be used by anyone who possesses it.
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(U) Gift cards can be purchased anonymously through retail outlets. They are sometimes
pre-denominated and "association-branded," meaning they carry the Visa, MasterCard, or
American Express logos. Gift cards generally do not have a reload feature, although there
may be exceptions to this rule. Gift cards differ from smart cards in that transactions and
balances are maintained by the issuer or a designated processor and can be replaced or
cancelled if they are lost or stolen.
(U) Prepaid debit cards (PDC) are association-branded and are often linked to bank accounts.
PDC holders can reload the cards with additional value, use the cards to purchase products
or services, and withdraw funds from automated teller machines (ATM) in virtually any
country. As with gift cards, transactions and balances on PDCs are maintained by the issuer
or a designated processor and can be replaced or cancelled if they are lost or stolen. While
any type of PDC can be exploited by money launderers, those with no connections to bank
accounts offer the greatest opportunities.
(U) Stored value cards can also be defined based on their transaction cycle. The cycle for
SVCs can be defined as either closed system or open system.
(U) Closed system SVCs are issued by a specific retailer and can only be used to purchase
the products or services of that retailer. Closed system SVCs can sometimes have a reload
feature, but cannot be used for ATM withdrawals. An example of a closed system SVC is
the AT&T (American Telephone and Telegraph) prepaid telephone card that can only be
used for telephone calls.
(U) Open system SVCs can generally be used for purchases at retailers who accept Visa,
MasterCard, American Express, or Discover, as well as to withdraw funds at ATMs
worldwide. In some cases, open system SVCs are limited to retail purchases. However, most
(U) Open system PDCs, particularly those not linked to a bank account, can be purchased
with very little personal information or verification by launderers. They can easily be
transported without detection and can be used to withdraw funds at ATMs. They can then be
reloaded with additional illegally derived funds with the intent of conducting other ATM
withdrawals.
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(U) Emerging technology will produce new forms of stored value devices. An example is
the mobile payment, or “m-payment,” which permits funds to be stored and transferred
though cellular telephones.
(U) Figure 1 illustrates various prepaid cards that can be purchased on the Internet. It should
be noted that the Vaya MasterCard features virtually anonymous purchase and use.
Stored Value Cards
fwSSsS a#
llMi Vava™ MastcxCar-dCg? Card .
Enjoy all' of the benefits of £ MasterCard® card' but with:
Guaranteed Approval
* No credit check, bank account. or'sccurity deposit
required
* Prepaid, with easy loading options
* Add cashinstantly at thousands of retail locations
* Purchasing power at more than 32 million merchants
worldwide.
* Cash Access at more than 900,000 ATMs
* Send Cash
* Transfer money instantly to other Vaya Card holders
HOMELAND
facial
t W WM UUm VJr**3
c-
Figure 1. (U) Association-Branded Prepaid Cards
4.3.3. (U) Informal Value Transfer Systejns (IVTS)
(U) Informal value transfer systems, also known as underground banking systems, are
informal networks of individuals and/or entities that have the ability to instantaneously
transfer value without the physical movement of cash. Hawalas are a type of IVTS that have
developed over a period of one hundred years. Historically, these underground systems have
been operated and used by networks of individuals of similar ethnic origin. These informal
networks flourished because of a mistrust of traditional banking systems. Hawalas allow the
instantaneous transfer of funds from an individual in one country to an individual in another
country by Hawaladars, the individuals responsible for arranging such transactions.
Hawaladars can move money to a recipient overseas, usually through a telephone call to the
Hawaladar ’s counterpart in a recipient’ s country.
(U) It is important to note that Hawalas can also be used for legitimate purposes, such as
sending money to family members in other countries where the financial system is less
developed. However, the structure of Hawalas allows them to be exploited by money
launderers as shown below in Figure 2.
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Figure 2. (U) Basic Hawala
4.3.4. (TJ) Black Market Peso Exchange (BMPE)
(U) The Black Market Peso Exchange developed in response to
restrictions that limited access to U.S. dollars in Colombia. To obtain U.S. dollars,
Colombian nationals were required to obtain import permits, which could only be justified
by their necessity to the government. Significant duties and taxes were imposed on such
transactions. Colombian money brokers began offering U.S. dollars in the black market to
circumvent this process. The BMPE is used primarily by Colombian drug traffickers who
use Colombian money brokers and their agents in the United States to receive the proceeds
of drug transactions without the physical transportation of cash across national borders.
Figure 3 illustrates a basic BMPE transaction.
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Black Market Peso Exchange
Invoice Payment
(in USD)
USA Rs
o.s. Businessperson
la I liate I
■ 2
Drug Proems
Money Broker ^ Drug Dealer
ii
*3
i ‘I
r
u
Mercl
andise
7
Settlement I
arrangemenfj
Confirm receipt
‘of USD
®lEr
_ 3 ! [H
Colombia
Money Broker
Colombia
Colombian
Drug Cartel
Figure 3. (U) Black Market Peso Exchange
4.3.5. (U) Global Financial System
(U) The global financial system consists of banks, securities firms, insurance companies,
money services businesses, casinos, credit unions, and any other entity defined as a financial
institution under the BSA. Because money services businesses are addressed in another
section of this PG, this section focuses on the remaining categories.
(U) Illicit funds can be transferred from account to account and from institution to
institution in an effort by launderers to cloud the paper trail for law enforcement. With
current technology, banking transactions can be conducted online, and international
accounts can be established with relative ease. While such advancements have facilitated
legitimate banking functions, they have also provided opportunities for criminals to more
easily engage in layering transactions. The use of accounts established in the names of
nominees or shell companies exacerbates the problem by creating an additional layer of
anonymity.
(U) Specific uses of the global financial system to launder money include:
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• (U) Structuring: This is most often done when a criminal deposits funds into
financial institutions in increments less than $10,000 in value in order to avoid the
statutory requirement for filing Currency Transactions Reports (CTR). Lower level
individuals (smurfs) are sometimes hired to conduct such transactions, typically
using multiple financial institutions. This process is known as smurfing. The process
usually involves three phases: First, funds are deposited into several accounts at
different financial institutions. Second, the funds are wire-transferred and pooled
into a single account in another location. Third, the funds are
wire-transferred out of the country.
• (U) Loan-back schemes: Such schemes involve illegal deposits at financial
institutions where the criminal receives a "loan" from the bank, trust, corporation, or
fiduciary. The loan is actually the criminal’s own illegally derived money.
• (U) Insurance contract schemes: Insurance companies defined as financial
institutions under the BSA must comply with certain reporting and AML compliance
programs. However, it was only beginning May 2, 2006, that certain insurance
companies were compelled to implement AML compliance programs.
(U) Money launderers use various types of insurance contracts to conceal ill-gotten gains.
The most common schemes involve life insurance contracts. In fact, more than 65 percent of
all money laundering cases involving insurance contracts pertain, to life insurance and have
some variation of the following schemes:
• (U) Over-funding life insurance contracts followed by early withdrawals: The
penalties are viewed as a cost of doing business.
• (U) Establishing life insurance contracts for fictitious individuals: Death certificates
are then falsified by corrupt doctors and are sent to insurance companies to process
the claims.
• (U) Purchasing life insurance contracts with a cooling-off period allows launderers
to pay for the contracts and then liquidate them without penalty. Insurance
companies issue checks that can then be deposited into banks free-and-clear.
(U) It is important to note that any life insurance contract with a cash value can be exploited
by money launderers. Key "red flags" regarding life insurance contracts include:
• (U) Large " one-off 1 cash transactions.
• (U) High premium payments relative to reported income.
• (U) Policy holder’s lack of concern over charges and early redemption fees.
• (U) Policy payments made by a third party or by multiple parties, indicating a
possible nominee name on the contract itself.
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• (U) Premiums received from offshore and/or lightly regulated financial
intermediaries.
• (U) Frequent changes of beneficiary.
(U) Figure 4 illustrates how the global financial system can be exploited by criminals to
launder money.
The Use of Shell Companies &
ca-cmspirato, ] The Global Financial System
5 *
Deliverftoeeeds
Purchase Varlawa rife Policy in full,
in co-coiisiiiralor's name
Account of ABC. Ine.
Figure 4. (U) Use of the Global Financial System to Launder Money
• (U) The criminal deposits fraud proceeds into a U.S. bank account established in the
name of shell company ABC, Inc.
• (U) The criminal orders a wire transfer using a remote computer from a U.S. bank
account to a bank account in Cypress in the name of shell company XYZ, Inc.
• (U) The criminal then orders a wire transfer from XYZ, Inc., to a French insurance
company to fund a whole life insurance policy in the name of a co-conspirator.
• (U) As the criminal instructed, the co-conspirator cancels the contract early, pays an
early termination penalty, and receives a check for the remaining cash amount.
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• (U) The co-conspirator then deposits the check into a bank account free-and-clear
and arranges to return the money to the criminal.
• (U) The criminal uses the laundered funds to purchase assets.
4.3.6. (U) Money.Services Businesses
(U) Money services businesses provide a full range of financial services and products
outside of the banking system. These products and services are offered to customers without •
the need to establish accounts and often with minimal identification. MSBs are currently
defined as financial institutions under the BSA and are subject to its requirements. MSBs
remain an attractive avenue for launderers worldwide.
(U) MSBs generally fall into one of five categories:
1. (U) Money transmitters.
2. (U) Currency exchangers.
3. (U) Check cashers.
4. (U) Issuers of money orders and traveler’s checks.
5. (U) Sellers or redeemers of traveler’s checks, money orders, and stored value cards.
(U) Money transmitters such as Western Union can send money to thousands of cities
instantaneously or within 24 hours. The sheer volume of legitimate cash transactions
through these companies provides an excellent hiding place for money laundering activity.
Money transmitter services are inexpensive relative to other laundering channels and often
transfer funds for customers with no face-to-face contact.
(U) Currency exchangers (CE) exist in major cities, airports, and along international borders
for the purpose of exchanging the currency of one country to that of another. CEs typically
take the currency obtained from customers and deposit those funds into the CE’s bank
account, thereby limiting the paper trail for law enforcement when tracing the illicit funds.
In some cases, where the CEs are part of the laundering scheme, they may move currency
for customers in bulk under the name of the CE to mask the identity of the source of the
funds.
(U) Casas de Cambio and giros are smaller versions of CEs. Once located only along the
Mexican border, they are now found throughout the United States. Casas are used primarily
to move money to Mexico, while giros are used to transfer funds to Colombia.
(U) Check cashers allow criminals to convert checks to cash without an account, and often
with little disclosure of personal information. The conversion of these checks (often the
checks of fraud victims) by the check casher significantly thwarts law enforcement efforts to
establish the identity of the check holder and develop evidence on the ultimate use of
proceeds.
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(U) Issuers of money orders and traveler’s checks include Western Union, MoneyGram, and
the U.S. Postal Service. Money orders in particular are vulnerable to money laundering
because if purchased in amounts under $3,000, they can be purchased anonymously or with
little personal information about the purchaser. In the absence of other methods of
identification such as surveillance cameras and witness interviews, it may be virtually
impossible to obtain the identity of the true money order purchaser.
(U) For further information on these and other money laundering schemes, refer to the U.S
Money Laundering Threat Assessment, December 2005, which can be found at thq
4.3.7. (U) Corporate Laundering Schemes
(U) False sales or fraudulent invoicing is a means by which a criminal, using either real or
bogus corporations, shows illicit funds as proceeds of seemingly real business transactions.
The "corporation' 1 prepares invoices that are inflated or deflated, depending on which way
the criminal wants to move f unds. This technique is often used in connection with sales of
precious metals. For example T : I
|The value of the sale is overinflated. Funds are transferred to the account of the
foreign company to pay for the gold. The gold is then smuggled back out of the' country to
be re-sold and re-shipped to the U.S. company.
(U) Fraudulent foreign enterprises: Once outside the country, money can often be returned
for investment in the United States by claiming a profit from a foreign business venture.
Situating the bogus transaction in a financial haven country protects the scheme. In many
cases, such transactions are also linked to tax fraud.
4.3.8. (U) Digital Currency (E-Currency)
(U) Digital currency firms offer an alternative to traditional paper currency. The issuance of
digital currency is driven by two distinct motives. First, because digital currency is often
backed by precious metals such as gold, digital currencies provide an easier, more
cost-effective way to invest in the underlying commodity. Second, digital currency can be
used as a means of international exchange because, unlike paper currency, digital currency
is standardized across all countries. Digital currency providers are typically registered
offshore, although many of their operations touch the United States in some way.
(U) Digital currency accounts can be established online, often with very little personal
information or verification. Accounts can be funded through digital currency exchange
brokers (CEB) through various methods. In some cases, the CEBs can convert the digital
currency of one firm to that of another. With just a few keystrokes on a computer, account
holders can purchase products and services through participating vendors, or transfer digital
currency units instantaneously to other account holders worldwide.
(U) Digital currency serves many legitimate functions. Companies can use digital currency
to facilitate payments to suppliers or disseminate dividends to shareholders. However,
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because of the lax standards of many digital currency firms with regard to establishing AML
procedures and controls and the current lack of government regulation, digital currency
poses significant risks to society and provides a means for criminals to launder money or
finance terrorist activity.
4.4. (U) Money Laundering: Conducting Investigations
(U) Money laundering investigations are similar to investigations of other financial crimes.
Traditional investigative methods serve a valuable purpose, particularly when the criminal
activity has been completed and opportunities for a proactive approach are unavailable.
However, traditional investigative methods can often be used in conjunction with covert
operations. The combination of both approaches can greatly enhance the extent and quality
of the evidence obtained.
(U) Money laundering investigations may be pursued by targeting the underlying criminal
activity and tracing the illicit proceeds or by identifying the illegal money laundering
operation and linking the funds to an SUA. While each investigation is unique in certain
aspects, and extensive discussion regarding all available investigative methods is beyond the
scope of this PG, there are certain generic investigative steps that warrant attention. These
steps can be categorized as follows:
4.5. (U) Initiating Money Laundering Predicated Investigations/Transactions
4.5.1. (U) Traditional or Overt Investigations
• (U) The case agent prepares an EC containing background information of the
investigation and predication.
• (U) SSA approval is obtained. If the case involves a SIM, additional approval is
required as set forth in the DIOG, Section 1 0.
4.5.2. (U) Sophisticated and Covert Investigative Methods
4.5.2.1. (U) Pen Registers
(U) Pen registers are obtained by submitting a court order to a telephone company. Pen
registers can provide investigators with a detailed account of the subject’s calls, both made
and received; the times and dates of the calls; and telephone numbers of the recipients or
callers. This information can be used to identify potential co-conspirators and to establish
the existence of relationships with subjects of other investigations or with individuals
previously convicted of a crime.
4.5.2.2. (U) Title m
(U) A Title III, otherwise known as a “bug” or wiretap, is a valuable investigative method
that allows an investigator to listen to real-time conversations of subjects or key individuals
either on a telephone or in a particular location. Title Ills can also be obtained to physically
observe individual actions on closed circuit television, computer, etc. Title His have the
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potential to show a jury the subject’s intent, an admission of guilt, or the subject in the
process of committing a crime. There is no better evidence than a subject’s own words. In
order to obtain authorization for a Title in interception, there must be probable cause that
the device or location is being used to discuss criminal activity.
4.5.2.3. (U) Undercover Operations
(U) UCOs are proactive investigations that involve the use of undercover employees and/or
CHSs. UCOs, if managed properly, can result in substantial evidence during the
investigation of money laundering and other criminal activities. Among the many benefits
of UCOs are:
• (U) Potential access to intelligence and/or evidence that would not otherwise be
accessible.
• (U) The ability to be proactive and prevent criminal activity from occurring or prevent
the public from being victimized.
• (U) The ability to tailor the investigation to specific evidentiary and prosecutorial
needs.
• (U) Publicity of a successful UCO, which may deter future criminal activity.
For more information regarding UCOs, see Sections 3.1 .2 through 3.1.5 of this PG and
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4.5.3. (U) Transactions that Involve the Use of a UCE
4.5.3.1. (U) Money Laundering Transactions Under $1 Million Dollars in Total
• (U) Obtain approval by EC from the SAC or ADIC.
• (U) Provide a copy of the approved EC to AF/MLU (for information only). /
4.5.3.2. (U) Money Laundering Transactions Under $1 Million Dollars and UCE
Will Engage in More Than Five Separate Substantive Contacts with
Subjects
• (U) Obtain authority for a Group II UCO, unless a sensitive circumstance makes
the investigation a Group I UCO.
• (U) Obtain oral concurrence, followed by an official EC from the appropriate
FBIHQ operational unit, based on case classification.
• (U) Obtain concurrence by EC from the SAC or ADIC.
• (U) Provide a copy of the approved EC to AF/MLU for information only.
4.5.3.3. (U) Transactions in Excess of $1 Million Dollars in Total
• (U) Obtain authority for a Group I UCO.
• (U) Consult with the appropriate FBIHQ operational unit regarding the planned
UCO.
• (U) Prepare a Group I UCO proposal. The proposal must include:
o A background of the investigation.
o (U) The objectives of, and need for, the UCO.
o (U) The subjects and predication.
o (U) A detailed explanation of the proposed UCO's transactions and methods,
o (U) The CHSs/UCEs to be used,
o (U) The international aspects, if any.
o (U) The sensitive circumstances that apply,
o (U) A proposed budget (see the FGUSO for additional details).
• (U) Provide the appropriate operational unit and AF/MLU with copies of the
completed proposal. The appropriate operational unit will present the proposal to
the CUORC for approval.
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4.5.4. (U) Investigations/Transactions That Involve the Use of a CHS
4.5.4.1. (IT) Without a Group I or Group II UCO:
• (U) Obtain authorization from the field office SAC or ADIC.
• (U) Provide informational copies to AF/MLU of all reports regarding money
laundering transactions.
4.5.4.2. (U) With a Group I or Group II UCO:
(U) If the UCO is currently active, no further authorization is required, provided the
approved money laundering cap has not been exceeded.
4.6. (U) Requesting Exemption for Money Laundering Transactions with
Terrorist Organizations
• (U) Submit an EC to the appropriate operational unit based on case classification
and include the following information:
o (U) An explanation of the investigative need to conduct the transaction and the
reason for it.
a (U) An explanation as to why other investigative methods are insufficient.
o (U) The costs/benefits of engaging in such transactions.
o (U) The potential issues and liabilities to the FBI of engaging in such
transactions.
o (U) The estimated risks to third parties and U.S. citizens.
o (U) Confirmation of authority of the CHS/UCE to engage in such undercover
activity pursuant to the AGG-Dom.
o (U) Written concurrence from the United States Attorney’s Office.
o (U) Written approval from the Assistant Attorney General (AAG), Criminal
Division, DOJ, pursuant to the AGG-Dom.
(U) If the proposed transaction involves funds of a drug trafficking organization and the
Department of the Treasury’s OF AC has issued an order to block such transaction, the
following additional information is needed:
• (U) Concurrence from OF AC.
• (U) Authority from the AG; ultimate approval must be determined by the Director
of the FBI.
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4.9. (U) Traditional Interviews
(U) Interviews can be classified as non-conffontational or confrontational. The following
are brief explanations of both:
4.9.1. (U) Non-confrontational
(U) Non-confrontational interviews typically involve cooperative individuals who were
not involved in the crime under investigation and have no ties to the subject. At the
institutional level, this may include corporate employees, bank or post office personnel,
and representatives of money services businesses, casinos, or other financial service
providers. Other individuals who are typically non-confrontational are those who
witnessed a particular event, but had no involvement in the criminal incident and have no
relationship to the subject. Non-confrontational interviews in money laundering cases can
be conducted to confirm the identity of an individual who engaged in a particular bank
transaction or series of transactions; to confirm the identities of other individuals
associated with the subject; and to clarify any observed suspicious behavior.
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4.9.2. (U) Confrontational -
(U) Confrontational interviews generally involve individuals who were, or may have
been, involved in the money laundering or underlying criminal scheme, are friendly with
the subject, or, even though not involved in the crime, have a general dislike or distrust of
law enforcement. Confrontational interviews can be productive, if conducted properly.
Individuals involved in the crime under investigation or who know the subject can
potentially provide firsthand accounts of conversations regarding the scheme and
generate new leads. In addition, such interviews may lead to the development of CHSs,
which can be the catalyst for a more proactive undercover approach.
4.10. (U) Subpoenas
(U) The following types of subpoenas are commonly used in money laundering cases:
(1) federal grand jury subpoenas, which are issued and returnable to the AUSA acting on
behalf of the grand jury; (2) trial subpoenas, which may be issued by the AUSA or the
court and are returnable to the clerk of the court; (3) administrative subpoenas, which
may be issued by the SS A of an organized crime or drug squad or by a supervisory senior
resident agent (SSRA), and are returnable to the FBI; and (4) regulatory subpoenas,
which are issued by independent agencies such as the SEC and CTFC and are returnable
to those agencies. With respect to each of these types of subpoenas, the goal is to request
all relevant records while minimizing the risk that material might be produced beyond
that which is relevant to the investigation. AF/MLU can provide samples of subpoena
riders that will accomplish this.
(U) It must also be noted that, with respect to federal grand jury subpoenas, Federal Rule
of Criminal Procedure 6(e) provides restrictions on persons with whom subpoenaed
materials may be shared. The AUSA must be advised of all agents, analysts, contractors,
or others involved in the investigation in order to approve their participation and issue a
6(e) letter to each member of the investigative team.
(U) Agents must comply with the Right to Financial Privacy Act when using
administrative subpoenas for records from financial institutions.
4.11. (U) Ex-Parte Orders
(U) Ex-parte orders can be used to obtain tax records for an individual or entity. Tax
records offer a significant amount of information that can support money laundering
allegations because criminals generally do not report their illicit income to the IRS. In
spite of the fact that their income may have been illegally obtained, launderers are still
required to report the income on their tax returns or face possible tax evasion charges. A
review of tax records, in relation to the subject’s lifestyle, may indicate that the subject
failed to report income because it was illegally derived. For example, if the subject lived
in, and exercised control over a home worth $1 million dollars, yet only reported income
of $35,000 on his most recent tax return, assuming no significant appreciation in the
home, this would likely indicate some other concealed source of income. Ex-parte orders
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can be obtained by submitting an application to the court. It is a common misconception
that the IRS is needed for this purpose.
(U) The application for the ex-parte order is similar to an affidavit filed by an agent in
support of a complaint, arrest, or seizure warrant. It must set forth reasonable cause that:
(1) a federal violation has been committed; and (2) the tax returns will provide the most
probative form of evidence. The tax return does not have to be the only means of
acquiring this evidence. For example, in a case where there is probable cause to believe
that a subject is using shell companies to launder money, it is possible that mail covers or
a Title III would reveal some of this evidence, but the tax returns would be the most
probative, as they would likely contain IRS Form 1 099 statements and lists of companies
from which the subject received income. The agent must swear to the contents of the
affidavit in front of a district court judge (magistrates do not have authority to enter an
ex-parte tax return order). Once the order has been signed by the judge, the agent serves
the order on the IRS facility designated for compliance in that district. In some districts,
the order will require the tax returns to go back to the judge for review, after which the
judge will provide them to the AUSA if they are determined to be relevant to the
investigation. In other districts, the order will require the IRS to provide the records
directly to the AUSA. As with any case where taxpayer information is involved, federal
law requires that only persons working on the investigation be permitted to view the
returns. In the event that copies are placed in an FBI file, there must be a cover EC or
FD-302 captioned with the appropriate “taxpayer information” notation, which is
available in either the EC or FD-302 macros.
4.12. (U) Mutual Legal Assistance Treaty and Letters Rogatory
(U) Similar to subpoenas, MLATs can be used to obtain records or information from
foreign jurisdictions. MLATs are contractual obligations between countries and create
routine channels for obtaining a broad range of legal assistance on criminal matters. The
type of assistance that can be obtained by MLATs includes taking testimony or
statements of persons, obtaining documents and other physical evidence in a form
admissible at trial, and executing searches and seizures. The amount of assistance that is
available varies by treaty and is subject to the intricacies of each country’s law. The best
way to handle a situation where an MLAT is being contemplated is to call the DOJ OIA
at 202-514-0000. OIA has attorneys assigned for each country in order to provide expert
advice on the likelihood of accomplishing the purpose of the MLAT in the necessary time
period. OIA makes the official MLAT request on behalf of the United States. Agents
seeking to submit an MLAT request must contact OIA at the earliest possible opportunity.
Where the United States has no MLAT with a country, Letters Rogatory can be used;
however, recipient countries have no obligation to comply with the Letters Rogatory, and
the process can be lengthy. OIA will also provide advice on Letters Rogatory, as the
procedures for obtaining Letters Rogatory will vary depending on the country involved.
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4.13. (U) Physical Surveillance
(U) Physical observation can help the investigator determine a subject’s day-to-day
pattern of activity. Such patterns can reveal, for example, the identities of individuals
with whom the subject meets on a daily basis, or whether the subject makes frequent
visits to grocery stores or gas stations that are often used to transmit illicit funds.
Surveillances must be viewed as opportunities to develop intelligence, leads on additional
subjects and/or corrupt businesses, and evidence of the crime under investigation.
4.14. (U) Records Checks
(U) Records checks provide background information on subjects and their businesses that
can be used to an investigator’s advantage. The checks may consist of arrest and criminal
histories; Automated Case Support (ACS) checks; and Internet and public database
searches including bankruptcy filings, deeds, judgments/liens, property tax records, voter
registrations, building permits, and corporate/business records. Records can provide
additional details on subjects in terms of their levels of risk; current and prior residences;
marital and immigration statuses; and current and prior employer information. In addition,
information obtained through records searches can facilitate the identification of a
subjects assets for the nnrnns e nf forfeiture Databases that are available to FBI agents
include ind
(4) Dun and Bradstreet. ”
(IJ) The information obtained must be used to assess the subject’s criminal capabilities,
possible criminal intent and motivation, and any weak links that the investigator could
exploit. Weak links may include a bitter ex-spouse or ex-employer, pending or past
lawsuits to which the subject was a defendant, and failed businesses or bankruptcies.
4.15. (U) Other
rU) Other investigative methods such as |
can be used, depending on the needs of a particular investigation. The h i e
requirements for each of these methods are set forth in the DIOG, Section 1 1 .
4.16. (U)' Financial Analysis
(U) Financial analysis is a necessary and often critical tool in successful money
laundering investigations. Laundering is a crime involving illicit money; therefore,
knowing where the money is at any given time, and the path it took to get there, may be
the most important information to present to a jury. The process begins with obtaining
records from financial institutions, including all financial transactions related to the crime.
When the investigating agent has specific account information, records can be obtained
by sending subpoenas to institutions in the United States or MLAT/Letters Rogatory to
institutions in foreign jurisdictions. When the investigator does not have specific account
information, it may be obtained through USA PATRIOT Act 314(a) or Egmont requests.
(See Section 4.5 of this PG for additional details.)
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(U) Once the records have been received, their contents must be placed in a format that
allows the investigator or financial analyst to sort and test the data' more easily. In the
absence of more sophisticated analytical tools, spreadsheet or databasesoftware packages
such as Microsoft Excel or Access can be used for this purpose. Case agents must consult
with an experienced financial analyst to determine the best analytical tool and data format
for their particular investigative needs:
(U) Additional information regarding the use oi
below.
4.16.1. (U) Obtaining and Analyzing Financial Records
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• (U) Obtain additional underlying documentation necessary to illustrate that assets
continue to be under the control of the subject(s).
• (U) See the DIOG. Section 1 1 .
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5. (U) Recordkeeping Requirements
5.1. (U) Statistical Reporting for All Money Laundering Investigations
(U) At the completion of a money laundering investigation, a statistical record must be
made in the accomplishment section of the FD-515. This reporting must be made
regardless of whether the case is classified as a 272 or whether the subjects were charged
with a money laundering violation.
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6. (U) Summary of Legal Authorities
(U) Included in the Anti-Drug Abuse Act of 1986 (and its amendments of 1988) are
money laundering statutes that have a wide range of applications for many FBI cases.
Violations of money laundering laws are usually tied to other criminal activities, ranging
from the various RICO predicates, drugs, bank fraud, terrorism, espionage, etc.
6.1. (U) Primary Money Laundering Statutes
• (U) 18 U.S.C. § 1956 - Laundering of monetary instruments.
• (U) 18 U.S.C. § 1957 - Engaging in monetary transactions in property derived from
specific unlawful activity.
6.2. (U) Related Criminal Statutes
• (U) 18 U.S.C. § 1960 - Prohibition of unlicensed money-transmitting businesses.
6.3. (U) Companion Forfeiture Statutes
• (U) 18 U.S.C. § 981 - Civil forfeiture.
• (U) 1 8 U.S.C. § 982 - Criminal forfeiture.
(U) In addition, the PATRIOT Act of 2001 expanded money laundering and companion
violations and enhanced law enforcement’s ability to investigate money laundering
activity. The following represent the most relevant sections of the PATRIOT Act with
regard to money laundering and terrorist financing activity:
• (U) Section 3 1 2: Necessary controls for correspondent accounts.
• (U) Section 313: Prohibiting business with foreign shell banks.
• (U) Section 314 (a): Information sharing with law enforcement.
• (U) Section 314 (b): Information sharing among financial institutions.
• (U) Section 315: Foreign crimes as specified unlawful activities.
• (U) Section 319: Treatment of interbank/correspondent accounts.
• (U) Section 371: Bulk cash smuggling.
• (U) Section 372: Currency reporting offenses.
• (U) Section 373: Illegal money transmitting businesses.
• (U) Section 405: Dependent/parallel transactions.
• (U) Section 813: Terrorist activity as RICO predicate offenses. ,
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.4. (U) Federal Regulations
(U) Currency and Foreign Transactions Reporting Act.
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(U) Appendix A: Legal Authorities
1. . (Ll) 18 U.S.C. § 1956 - Laundering of Monetary-Instruments
(U) (a)(1) - Financial Transaction Provision
(U) Part (A)(i) is directed toward situations where the financial transaction involves
illegal proceeds that are used to promote criminal activity (e.g., illegal proceeds used to
purchase drugs or smuggle money in support of terrorist activities).
(U) Part (A)(ii) is directed toward situations where the financial transaction involves an
intent to commit tax fraud or evasion.
(U) Part (B)(i) is directed toward situations where the financial transaction involves
illegal proceeds that are used to conceal the nature, location, source, ownership, or
control of the proceeds (e.g., the subject places the illegal proceeds into a "legitimate"
business in order to make the subject's wealth appear legitimate).
(U) Part (B)(ii) is directed toward situations where the financial transaction is designed to
avoid or attempt to avoid state or federal reporting requirements (e.g., a subject directs
others [smurfs] to buy cashier's checks with illegal proceeds in amounts less than $10,000
to avoid Currency Transaction Reporting requirements).
(U) (a)(2) - International Transfer Provision (Transport, Transmit, or Transfer
Funds)
(U) Part (A) is directed toward situations where funds or monetary instruments are being
moved into or out of the United States with the intent to promote an illegal activity (e.g.,
the proceeds are moved out of the United States to buy drugs or support of terrorist
activities).
(U) Part (B)(i) is directed toward situations where illegal funds or monetary instruments
are moved into or out of the United States in order to conceal the nature, source, etc., of
the illegal proceeds (e.g., the subject moves or transmits an illegal monetary instrument to
an offshore account or business in order to conceal or legitimatize the money).
(U) Part (B)(ii) is directed toward situations where illegal funds are moved into or out of
the United States in order to avoid a state or federal transaction reporting requirement
(e.g., subject moves the illegal funds out of the United States in amounts greater than
$10,000 and does not file the appropriate Currency and Monetary Instrument Report).
(U) Penalties: 18 U.S.C. § 1956 (a)(1) and (2)
(1) (U) The criminal penalty for a violation of either Subsection (a)(1) or (a)(2) of §
1 956 is a maximum fine of $500,000, or twice the value of the monetary
instruments or funds involved, whichever is greater, or imprisonment for not more
than 20 years or both.
(2) (U) Violators of Subsections 1956(a)(1) and (a)(2) are also liable to the United
States for a civil penalty of not more than the greater of the value of the property;
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funds; or monetary instruments involved in the transaction, or $10,000. Such civil
penalty is intended to be imposed in addition to any fine imposed for the criminal
offense.
(3) (U) For adjudication or enforcement purposes, the district courts have jurisdiction
over any foreign person, including any financial institution authorized under the
laws of a foreign country, against whom the action is brought, if service of
process upon the foreign person is made under the Federal Rules of Civil'
Procedure or the laws of the county in which the foreign person is found, and:
(a) (U) The foreign person commits a money laundering offense under 18
U.S.C. § 1956(a) involving a financial transaction that occurs in whole or in
part in the United States.
(b) (U) The foreign person converts to his or her own use property in which the
United States has an ownership interest by virtue of the entry of an order of
forfeiture by a court of the United States.
(c) (U) The foreign person is a financial institution that maintains a bank
account at a financial institution in the United States. Any district court may
issue a pretrial restraining order or take any other action necessary to ensure
that any bank account or other property held by the defendant in the United
States is available to satisfy a judgment under 18 U.S.C. § 1956(b). To
accomplish this, district courts may appoint a federal receiver to collect, .
marshal, and take custody, control, and possession of all assets of the
defendant, wherever located, to satisfy a civil judgment under § 1956, a
forfeiture judgment, or a criminal fine under 18 U.S.C. §§ 1956(a) or 1957,
including an order of restitution to any victim of an SUA. A federal receiver
may be appointed, upon application of a federal prosecutor or a federal or
state regulator, by the court having jurisdiction of the defendant in the case.
A federal receiver is an officer of the court, and the powers of the federal
receiver include the powers enumerated in 28 U.S.C. § 754, as well as
standing equivalent to a federal prosecutor for the purposes of submitting
requests to obtain information regarding the assets of the defendant from
FinCEN of the Department of the Treasury, or from a foreign country
pursuant to a Mutual Legal Assistance Treaty, multilateral agreement, or
other arrangement for international law enforcement assistance, provided
■ that such requests are in accordance with the policies and procedures of the
Attorney General.
(4) (U) It should also be noted that the forfeiture provisions of this act (See 1 8 U.S.C.
§ 981 and 982) may be applied in addition to civil and criminal penalties. (See
Forfeiture PG for additional information regarding civil and criminal forfeiture.)
Thus, a person who violates § 1956 by laundering $250,000 might have the funds
civilly forfeited, be subject to a fine of up to $500,000 if convicted of the criminal
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offense, and pay a civil penalty of another $250,000. For payment of the criminal
fine and civil penalty, the government may look to other assets of the defendant
who is not involved in the offense.
(U) (a)(3) - Sting Provision, also known as Reverse Money Laundering Transaction
A. (U) This subsection of the money laundering statute penalizes financial transactions
involving the covert use of government funds or property, which is represented to be
the proceeds of an SUA, when those financial transactions are conducted or attempted
with the intent to:
i. (U) Promote an SUA.
ii'. (U) Conceal the nature of funds or property believed to be the proceeds of an SUA.
iii. (U) Avoid a transaction reporting requirement under state or federal law.
B. (U) Funds or property are represented to be proceeds when the representation is made
by a law enforcement officer or other person (e.g., CHS) acting at the direction of a
law enforcement officer.
(0) Penalties: 18 U.S.C. § 1956(a)(3)
(U) Maximum of 20 years imprisonment or a fine under Title 1 8 or both.
2. (U) 18 U.S.C. § 1957 - Engaging in Monetary Transactions in Property Derived
from SUA
(U) This section is generally designed to address a subject who knowingly engages or
attempts to engage in a monetary transaction involvin p criminally derived property
greater than $ 10,000 and has been derived from SUA
(U) Penalties: 18 U.S.C. § 1957
(U) Maximum of ten years imprisonment or a fine under Title 1 8 or twice the amount of
the criminally derived property involved in the transaction or both.
(U) 18 U.S.C. §§ 1956/1957 Statute Definitions
1 . (U) "Knowing that the property involved in a financial transaction represents the
proceeds of some form of unlawful activity" (as in 18 U.S.C. § 1956 (c) (1)) means
that the person knew the property involved in the transaction represented proceeds
from some form, though not necessarily which form, of activity that constitutes a
felony under state or federal law, regardless of whether or not such activity is
specifically defined as an SUA.
2. (U) The term "conducts" (as in 18 U.S.C. §1956 (c) (2)) includes initiating,
concluding, or participating in initiating or concluding a transaction.
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3. (U) The term "transaction" (as in 18 U.S.C. § 1956 (c) (3)) includes a purchase;
sale; loan; pledge; gift transfer; delivery; or other disposition, and with respect to a
financial institution includes a deposit; withdrawal; transfer between accounts;
exchange of currency; loan, extension of credit; purchase or sale of any stock, bond,
certificate of deposit, or other monetary instrument; use of a safe deposit box; or any
other payment, transfer, or delivery by, through, or to a financial institution, by
whatever means effected.
4. (U) "Financial transaction" (as in 18 U.S.C. § 1956 (c) (4)) means a transaction that
in any way or degree affects interstate or foreign commerce (1) involving the
movement of funds by wire or other means, (2) involving one or more monetary
instruments, or (3) involving the transfer of title to any real property, vehicle, vessel,
or aircraft; or means a transaction involving the use of a financial institution that is
engaged in, or the activities of which affect, interstate or foreign commerce in any
way or degree.
5. (U) "Monetary instruments" (as in 18 U.S.C. § 1956 (c) (5)) means coin or
currency of the United States or of any other country, traveler's checks, personal
checks, bank checks, money' orders, investment securities in bearer form or otherwise
negotiable instruments in bearer form or otherwise in such form that title thereto
passes upon delivery.
6. (U) The term "financial institution" (as in 18 U.S.C. §1956 (c) (6)) includes any
financial institution, as defined in 31 U.S.C. § 53 12(a) (2), and any foreign bank as
defined in 12 U.S.C. § 31.01. The following is a list of "financial institutions":
(a) (U) An insured bank of the Federal Deposit Insurance Act.
(b) (U) A commercial bank or trust company.
(c) (U) A private banker.
(d) (U) An agency or branch of a foreign bank in the United States.
(e) (U) Any credit union.
(f) (U) A thrift institution,
(g) (U) A broker or dealer registered with the Securities and Exchange
Commission.
(h) (U) A broker or dealer in securities or commodities.
(i) (U) An investment banker or investment company.
0) (U) A currency exchange.
(k) (U) An issuer, redeemer, or cashier of traveler's checks, checks, money
orders, or similar instruments,
(l) (U) An operator of a credit card system.
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(m) (U) An insurance company.
(n) (U) A dealer in precious metals, stones, or jewels.
(o) (U) A pawnbroker,
(p) (U) A loan or finance company.
(q) (U) A travel agency.
(r) (U) A licensed sender of money or any other person who engages as a
business in the transmission of funds, including any person who engages as
a business in an informal money transfer system or any network of people
who engage as a business in facilitating the transfer of money domestically
or internationally outside of the conventional financial institutions system.
(s) (U) A telegraph company.
(t) (U) A business engaged in vehicle sales, including automobile, airplane, and
boat sales.
(u) (U) Persons involved in real estate closings and settlements.
(v) (U) The U.S. Postal Service.
(w) (U) An agency of the U.S. Government or of a state or local government
arriving out a duty or power of a business (described in this paragraph).
(x) (U) A casino, gambling casino, or gaming establishment with an annual
gaming revenue of more than $1,000,000 and is licensed as a casino under
the laws of any state or any political subdivision of any state or is an Indian
gaming operation.
(y) (U) Any business or agency that engages in any activity that the Secretary of
the Treasury determines, by regulation, to be an activity that is similar to,
related to, or a substitute for any activity in which any business (described in
this paragraph) is authorized to engage.
(z) (U) Any other business (designated by the Secretary of the Treasury) whose
cash transactions have a high degree of usefulness in criminal, tax, or
regulatory matters.
(aa) (U) Any company organized under the laws of a foreign country, a
territory of the United States, Puerto Rico, Guam, American Samoa, or the
Virgin Islands that engages in the business of banking, or any subsidiary or
affiliate organized under such laws of any such country. This includes,
without limitation, foreign commercial banks, foreign merchant banks, and
other foreign institutions that engage in banking activities usually in
connection with the business of banking in the countries where such foreign
institutions are organized or operating (12 U.S.C. § 3101(7)).
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7. (U) "Represented" (as in 18 U.S.C. § 1956(a)(3)) means any representation made
by a law enforcement officer or by another person at the direction of, or with the
approval of, a federal official authorized to investigate or prosecute violations of 1 8
U.S.C. § 1956(a)(3).
8. (U) "Monetary transaction" (as in 18 U.S.C. § 1957 (f) (1)) means the deposit,
withdrawal, transfer, or exchange, in or affecting interstate or foreign commerce, of
funds or a monetary instrument by, through, or to a financial institution, but such term
does not include any transaction necessary to preserve a person's right to
representation as guaranteed by the Sixth Amendment to the Constitution.
9. (U) "Criminally derived property" (as in 18 U.S.C. § 1957 (f) (2)) means any
property constituting or derived from proceeds obtained from a criminal offense.
10. (U) "SUA" (as in 18 U.S.C. § 1956) means:
(a) (U) Any act or activity constituting an offense listed in 18 U.S.C. § 1961(1),
except an act which is indictable under Subchapter II or Chapter 53 of Title 31.
(b) (U) With respect to a financial transaction occurring in whole or in part in
the United States, an offense against a foreign nation involving the manufacture,
importation, sale, or distribution of a controlled substance (as in 21 U.S.C.);
drug-type offenses; murder, kidnapping, robbery, extortion, destruction of
property by means of explosive or fire, or a crime of violence (as defined in 1 8
U.S.C. § 16); a fraud or any scheme or attempt to defraud, by or against a
foreign bank (as defined in paragraph 7 of Section 1(b) of the International
Banking Act of 1978); bribery of a public official, or the misappropriation, theft,
or embezzlement of public funds by or for the benefit of a public official;
smuggling or export control violations involving an item controlled on the U.S.
Munitions List established under Section 38 of the Arms Export Control Act (22
U.S.C. § 2778), or an item controlled under regulations under the Export
Administration Regulations (Title 15, C.F.R., Parts 730-774); or an offense with
respect to a multilateral treaty, either to extradite the alleged offender or to
submit the case for prosecution, if the offender was found in the United States.
(c) (U) Any act or acts constituting a continuing criminal enterprise (21 U.S.C.
§ 848).
(d) (U) An offense under the following:
Citation
SUA
18 U.S.C. §32
Relating to the destruction of aircraft.
18 U.S.C. § 37
Relating to violence at international airports.
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Citation
SUA
18U.S.C. § 115
Relating to influencing, impeding, or retaliating
against a federal official by threatening or injuring
the official’s family members.
18U.S.C. § 152
Relating to concealment of assets; false oaths and
claims; or bribery.
18 U.S.C. §215
Relating to commissions or gifts for procuring
loans.
18U.S.C. §351
Relating to congressional or cabinet officer
assassination.
18U.S.C. §§500-503
Relating to certain counterfeiting offenses.
18U.S.C. §513
Relating to securities of states and private entities.
18U.S.C. §541
Relating to goods falsely classified.
18U.S.C. §542
Relating to entry of goods by means of false
statements.
18U.S.C. §545
Relating to smuggling goods into the United States.
18U.S.C. §549
V
Relating to removing goods from U.S. Customs
custody.
18U.S.C. §641
Relating to public money, property, or records.
18 U.S.C § 656
Relating to theft, embezzlement, or misapplication
by a bank officer or employee.
18U.S.C. §657
Relating to lending and credit and insurance
institutions.
18 U.S.C. §658
‘
Relating to property mortgaged or pledged to farm
credit agencies.
18 U.S.C. §666
Relating to theft or bribery concerning programs
receiving federal funds.
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Citation
18 U.S.C. §§ 793, 794, or 798 Relating to espionage.
18U.S.C. §831
Relating to prohibited transactions involving
nuclear materials.
18 U.S.C. § 844(f) or (i)
18 U.S.C. § 875
18 U.S.C. §922(1)
18 U.S.C. § 924(n)
18 U.S.C. §956
18 U.S.C. § 1005
18 U.S.C. §1006
18 U.S.C. §1007
18 U.S.C. § 1014
18 U.S.C. § 1030
18 U.S.C. § 1032
Relating to destruction by explosives or fire of
government property or property affecting
interstate or foreign commerce.
Relating to interstate communications.
Relating to the unlawful importation of firearms.
Relating to firearms trafficking.
Relating to conspiracy to kill, kidnap, maim, or
injure certain property in a foreign country.
Relating to bank fraud and embezzlement.
Relating to fraudulent credit institution entries.
Relating to fraudulent Federal Deposit Insurance
Corporation transactions.
Relating to fraudulent loan or credit applications.
Relating to computer fraud and abuse.
Relating to concealment of assets from a
conservator, receiver, or liquidating agent of a
financial institution.
18 U.S.C. §1111
18 U.S.C. §1114
Relating to murder.
Relating to the murder of U.S. law enforcement
officials.
18 U.S.C. § 1116
Relating to murder of foreign officials, official
guests, or internationally protected persons.
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Citation
SUA
18U.S.C. § 1201
Relating to kidnapping.
18U.S.C. § 1203
Relating to hostage taking.
18U.S.C. §1361
Relating to willful injury of government property.
18U.S.C. § 1363
Relating to destruction of property within the
special maritime and territorial jurisdiction.
18U.S.C. § 1708
Relating to theft from the mail.
18U.S.C. § 1751
Relating to Presidential assassination.
18U.S.C. §§2113 or 2114
Relating to bank and postal robbery and theft.
18U.S.C. § 2280
Relating to violence against maritime navigation.
18U.S.C. § 2281
■
Relating to violence against maritime fixed
platforms.
18U.S.C. §2319
Relating to copyright infringement.
18U.S.C. §2320
Relating to trafficking in counterfeit goods or
services. (FBI)
18U.S.C. § 2332
Relating to terrorist acts abroad against U.S.
nationals.
18 U.S.C.§ 2332a
Relating to use of weapons of mass destruction.
18 USC § 2332b
Relating to international terrorist acts transcending
national boundaries.
18U.S.C. §§ 2339A and 2339B
Relating to providing material support to terrorists.
19U.S.C. § 1590
Relating to aviation smuggling.
49 U.S.C. § 46502
Relating to aircraft piracy.
Chemical Diversion and
Trafficking Act of 1988
A felony violation relating to precursor and
essential chemicals.
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Citation
SUA
Section 15 of the Food Stamp
Act of 1977
Relating to Food Stamp Fraud involving a quantity
of coupons having a value of not less than $5,000.
(FBI)
21 U.S.C. § 863, Controlled
Substance Act
Relating to transportation of drug paraphernalia.
Section 38(c) of the Arms
Export Control Act (22 U.S.C. §
2778)
Relating to criminal violations.
Section 1 1 of the Export
Administration Act of 1979 (50
U.S.C. App. 2410)
Relating to violations.
Section 206 of the International
Emergency Economic Powers
Act (50 U.S.C. §1702)
Relating to penalties.
Section 16 of the Trading with
the Enemy Act (50 U.S.C. App.
3)
Relating to offenses and punishment.
33 U.S.C. § 1251 etseq.
Felony offenses relating to the discharge of
pollutants into the Nation's waters.
33 U.S.C. § 1401 etseq.
Felony offenses relating to the dumping of
materials into ocean waters.
33 U.S.C. § 1901 etseq.
Felony offenses relating to the discharge of
pollutants from ships.
42 U.S.C. § 300f etseq.
Felony offenses related to the safety of public water
systems.
42 U.S.C. § 1490s(a)(l)
Relating to equity skimming.
Foreign Agents Registration Act
of 1938
Any felony violation of the act.
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Citation
SUA
Foreign Corrupt Practice Act ■
Any felony violation of the act.
18 U.S.C. §§669, 1035, 1347,
and 1518
Any act or activity constituting an offense
involving a federal health care offense.
42 U.S.C. §6901 etseq.
Felony offenses relating to resource conservation
and recovery.
(e) (U) Any act or activity constituting one of the predicate offenses to the
Racketeer Influenced and Corrupt Organizations Act (18, U.S.C. § 1961(1))
except an act which is indictable under the Currency and Foreign Transactions
Reporting Act. These offenses are as follows:
1 . (U) Any act or threat involving:
• (U) Murder.
• (U) Kidnapping.
• (U) Gambling.
• (U) Arson.
• (U) Robbery.
• (U) Bribery.
• (U) Extortion.
• (U) Dealing in obscene matter.
• (U) Dealing in a controlled substance or listed chemical (as defined in
Section 102 of the Controlled Substances Act), which is chargeable as a
state felony. '
2. (U) Any act which is indictable under any of the following:
Citation
SUA
18 U.S.C. §201
Relating to bribery.
18 U.S.C. §224
Relating to sports bribery.
18 U.S.C. §§471-473
Relating to counterfeiting.
18 U.S.C. §659
Relating to theft from interstate shipment if
the act indictable under 1 8 U.S.C. § 659 is
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Citation
SUA
felonious.
18U.S.C. §664
Relating to embezzlement from pension
and welfare funds.
18 U.S.C. §§ 891-894
Relating to extortionate credit transactions.
18U.S.C. § 1028
Related to fraud and related activity in
connection with identification documents.
18 U.S.C. § 1029
Relating to fraud and related activity in
connection with access devices.
18 U.S.C. § 1084
Relating to the transmission of gambling
information.
18 U.S.C. § 1341
Relating to mail fraud.
18 U.S.C. § 1343
Relating to wire fraud.
18 U.S.C. § 1344
Relating to financial institution fraud.
18 U.S.C. § 1425
Relating to the unlawful procurement of
citizenship or naturalization.
18 U.S.C. § 1426
Relating to the reproduction of
naturalization or citizenship papers.
18 U.S.C. § 1427
Relating to the sale of naturalization or
citizenship papers.
18 U.S.C. §§ 1461-1465
Relating to obscene matter.
18 U.S.C. § 1503
Relating to obstruction of justice.
18 U.S.C. § 1510
Relating to obstruction of criminal
investigations.
18U.S.C. § 1511
Relating to the obstruction of state or local
law enforcement.
18 U.S.C. § 1512
Relating to tampering with a witness.
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Citation
SUA
victim, or an informant [CHS].
18U.S.C. § 1513
Relating to retaliating against a witness,
victim, or an informant [CHS].
18U.S.C. § 1542
Relating to false statement in application
and use of passport.
18U.S.C. § 1543
Relating to forgery or false use of passport.
18U.S.C. § 1544
Relating to misuse of passport.
18U.S.C. § 1546
Relating to fraud and misuse of visas,
permits, and other documents.
18U.S.C. §§ 1581-1588
Relating to peonage and slavery.
18U.S.C. § 1951
Relating to interference with commerce,
robbery, or extortion.
18 U.S.C. § 1952
Relating to racketeering.
18U.S.C. § 1953
Relating to interstate transportation of
wagering paraphernalia.
18 U.S.C. § 1954
Relating to unlawful welfare fund
payments.
18 U.S.C. § 1955
Relating to the prohibition of illegal
gambling business.
18 U.S.C. § 1956
Relating to the laundering of monetary
instruments.
18 U.S.C. §1957
Relating to engaging in monetary
transactions in property derived from SUA.
18 U.S.C. § 1958
Relating to use of interstate commerce
facilities in the commission of-murder-for-
hire.
18 U.S.C. §§ 2251, 2251A,
Relating to sexual exploitation of children.
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—
Citation
SUA
2252, and 2260
18 U.S.C. §§ 2312 and 2313
Relating to interstate transportation of
stolen motor vehicles.
18 U.S.C. §§ 2314 and 2315
Relating to interstate transportation of
stolen property.
18 U.S.C. §2318
Relating to trafficking in counterfeit labels
for phonorecords; computer programs or
computer program documentation; or
packaging and copies of motion pictures or
other audiovisual works.
18 U.S.C. §2319
Relating to criminal infringement of a
copyright.
18 U.S.C. § 2319A
Relating to unauthorized fixation of, and
trafficking in, sound recordings and music
videos of live musical performances.
18 U.S.C. §2320
Relating to trafficking in goods or services
bearing counterfeit marks.
18 U.S.C. §2321
Relating to trafficking in certain motor
vehicles or vehicle parts.
18 U.S.C. §§ 2341-2346
Relating to trafficking in contraband
cigarettes.
18 U.S.C. §§ 2421-2424
Relating to white slave traffic.
3. (U) Any act which is indictable under:
* (U) 29 U.S.C. § 186 (dealing with restrictions on payments and loans to
labor organizations).
• (U) 29 U.S.C. § 501(c) (relating to embezzlement from union funds).
4. (U) Any offense involving fraud connected with a case under Title 1 1 (except
a case under § 157 of this title); fraud in the sale of securities; or the felonious
manufacture, importation, receiving, concealment, buying, selling, or
otherwise dealing in a controlled substance or listed chemical (as defined in
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Section 102 of the Controlled Substances Act), punishable under any law of
the United States.
5. (U) Any act that is indictable under the Currency and Foreign Transaction
Reporting Act, 31 U.S.C. § 531 1 et seq.
6. (U) Any act that is indictable under the Immigration and Naturalization Act,
Section 274 (relating to bringing in or harboring certain aliens), § 277
(relating to aiding or assisting certain aliens to enter the United States), or
§ 278 (relating to importation of an alien for immoral purpose) if the act
indictable under such section of such Act was committed for the purpose of
financial gain, 18 U.S.C. § 2421 et seq.
7. (U) Any act that is indictable under any provision listed in 1 8 U.S.C. § 2332b
(g)(5)(B).
(U) NOTE: The investigatory jurisdiction for money laundering violations is shared by
numerous federal law. enforcement agencies and is set forth in a Memorandum of
Understanding between the DOJ, the Department of the Treasury, and the United States
Postal Service, which is set forth in Appendix C. Generally, this jurisdiction is
determined by the particular SUA(s) involved. For further information regarding money
laundering jurisdiction, see Section 3.5 of this PG.
(U) Venue
(1) (U) Except as provided in the next paragraph, a prosecution for an offense under
18 U.S.C. §§ 1956 or 1957 may be brought in any district in which the financial
or monetary transaction is conducted, or any district where a prosecution for the
underlying SUA could be brought, if the defendant participated in the transfer of
the proceeds of the SUA from that district to the district where the financial or
monetary transaction is conducted.
(2) (U) A prosecution for an attempt or conspiracy offense under 18 U.S.C. §§ 1956
or 1 957 may be brought in the district where venue would lie for the completed
offense under the previous paragraph, or in any other district where an act in
furtherance of the attempt or conspiracy took place.
(3) (U) For purposes of 18 U.S.C. § 1956, a transfer of funds from one place to
another, by wire or any other means, constitutes a single, continuing transaction.
Any person who conducts (as that term is defined in 18 U.S.C. § 1956(1)(2)) any
portion of the transaction may be charged in any district in which the transaction
takes place.
(1) (U) Unlicensed Money Transmitting Business (18 U.S.C. § 1960)
(2) (U) The International Money Laundering Abatement and Financial Anti terrorism
Act of 200 1 was incorporated into the PATRIOT Act and was intended to
significantly increase the United States’ ability to combat the financing of
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terrorism. The scope of 1 8 U.S.C. § 1 960 is expanded to include any business,
licensed or unlicensed, that involves the movement of funds that the defendant
knows were derived from a criminal offense, or were intended to be used “to
promote or support unlawful activity.” It would not be necessary for the
government to show that the business was a storefront or other formal business
open to walk-in trade. To the contrary, it would be sufficient to show that the
defendant offered his/her services as a money transmitter to another.
(3) (U) It is already an offense under §§ 1956 and 1957 for any person to conduct a
financial transaction involving criminally derived property. Section 1 957 has a
$10,000 threshold requirement, while §1956 requires proof of specific intent
either to promote another offense or to conceal or disguise the criminal proceeds.
On the other hand, § 1960 contains neither of these requirements if the property is
criminal proceeds; or alternatively, if there is proof that the purpose of the
financial transaction was to commit another offense, it does not require proof that
the transmitted funds were tainted by any prior misconduct. Title 18 U.S.C. §§
981 and 982 contain civil and criminal forfeiture provisions for violations of 18
U.S.C. §§ 1956, 1957, and 1960.
(4) (U) The following is the full text of Title 18 U.S.C. Section 1960:
(a) (U) Whoever knowingly conducts, controls, manages, supervises, directs, or owns
all or part of an unlicensed money transmitting business, shall be fined in accordance
with this title or imprisoned not more than 5 years, or both.
(b) (U) As used in this section -
(1) (U) The term ‘unlicensed money transmitting business’ means a money transmitting
business which affects interstate or foreign commerce in any manner or degree and:
(A) (U) Is operated without an appropriate money transmitting license in a state
where such operation is punishable as a misdemeanor or a felony under state
law, whether or not the defendant knew that the operation was required to be
licensed or that the operation was so punishable.
(B) (U) Fails to comply with the money transmitting business registration requirements
under section 5330 of title 31, U.S. Code, or regulations prescribed under such
section.
(C) (U) Otherwise involves the transportation or transmission of funds that are known
to the defendant to have been derived from a criminal offense or are intended to
be used to promote or support unlawful activity.
(2) (U) The term ‘money transmitting’ includes transferring funds on behalf of the
public by any and all means including but not limited to transfers within this
country or to locations abroad by wire, check, draft, facsimile, or courier.
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(3) (U) The term ‘State’ means any State of the U.S., the District of Columbia, the
Northern Mariana Islands, and any commonwealth, territory, or possession of
theU.S.
4. (U) Currency and Foreign Transaction Reporting Act
(U) The Currency and Foreign Transactions Reporting Act was enacted in 1970 to
regulate depository institutions such as banks, credit unions, and thrifts. The Bank
Secrecy Act established requirements for recordkeeping and reporting to identify the
origin and movement of cash or other monetary instruments transported or transmitted
into or out of the United States or deposited in financial institutions. The BSA requires
certain individuals, banks, and other financial institutions to file currency reports with the
Department of the Treasury, identify the individuals conducting transactions, and
maintain appropriate documentation of financial transactions.
(U) The Money Laundering Control Act (MCLA) of 1 986 imposes criminal liability on
individuals and financial institutions that knowingly assist in the laundering of money or
structure transactions to avoid reporting them. The MLCA required banks to establish
and maintain procedures designed to ensure compliance with the requirements of the
BSA.
(U) The Suspicious Activity Report was created in 1996 as a means for financial
institutions to report known or possible violations of criminal law or the BSA, or
suspicious transactions related to money laundering. Filing was deemed mandatory for all
entities defined as financial institutions. Since approximately 1990, the definition of
financial institutions has been expanded to cover money services businesses, casinos,
card clubs, securities firms, the insurance industry, and banks.
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(U) The following sections of the act represent its most substantive components with
regard to money laundering and terrorist financing:
Sec, 312. (U) Special Due Diligence for Correspondent Accounts and Private
Banking Accounts
(U) This section requires each financial institution that establishes, maintains, administers,
or manages a private banking account or a correspondent account in the United States for
a non-USPER (United States Person), including a foreign individual visiting the United
States or a representative of a non-USPER, establish appropriate, specific, and where
necessary, enhanced, due diligence policies, procedures, and controls that are reasonably
designed to detect and report instances of money laundering through those accounts. The
enhanced due diligence policies, procedures, and controls required under paragraph (1)
must, at a minimum, ensure that the financial institution in the United States takes
reasonable steps to:
• (U) Ascertain for any such foreign bank, the shares of which are not publicly
traded, the identity of each of the owners of the foreign bank, and the nature and
extent of the ownership interest of each such owner.
• (U) Conduct enhanced scrutiny of such account to guard against money
laundering and report any suspicious transactions under subsection (g).
• (U) Ascertain whether such foreign bank provides correspondent accounts to
other foreign banks and, if so, the identity of those foreign banks and related due
diligence information, as appropriate under paragraph (1).
Sec. 313. (U) Prohibition on U.S. Correspondent Accounts with Foreign Shell Banks
(U) This section prohibits a financial institution from establishing, maintaining,
administering, or managing a correspondent account in the United States for, or on behalf
of, a foreign bank that does not have a physical presence in any country.
Sec. 314(a). (U) Cooperative Efforts to Deter Money Laundering
Tills section provides that financial institutions must query their account holder databases
in response to law enforcement requests in significant money laundering and terrorist
financing investigations.
Section 314(b). (U) Cooperative Efforts Among Financial Institutions
This section provides that financial institutions may share suspicious activity reports with
one another.
Sec. 315. (U) Inclusion of Foreign Corruption Offenses as Money Laundering
Crimes
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(U) This section makes the use of proceeds derived from violations of a foreign law, or
more specifically, "an offense with respect to which the U.S. would be obligated by a
multilateral treaty, either to extradite the alleged offender or to submit the case for
prosecution, if the offender were found within the territory of the U.S." a money
laundering offense.
Sec. 319. (U) Forfeiture of Funds in U.S. Interbank Accounts
(U) This section states that, for the purpose of a forfeiture under this section or under the
Controlled Substances Act, if funds are deposited into an account at a foreign bank, and
that foreign bank has an interbank (correspondent) account in the United States with a
covered financial institution, the funds are deemed to have been deposited into the
interbank account in the United States, and any restraining order, seizure warrant, or
arrest warrant in rem regarding the funds may be served on the covered financial
institution, and funds in the interbank account, up to the value of the funds deposited into
the account at the foreign bank, may be restrained, seized, or arrested.
Section 319(b) (U) of the USA PATRIOT Act
(U) This section authorizes the Secretary of the Treasury or the Attorney General to issue
a summons or subpoena to any foreign bank that maintains a correspondent account in
the United States, and to request records related to such correspondent account, including
records maintained outside of the United States relating to the deposit of funds into the
foreign bank. On September 23, 2002, the AG delegated this authority, pursuant to 31
U.S .C. § 53 1 8(k)(3), to the Assistant Attorney General of the Criminal Division and to
the U.S. Attorneys (subject to the approval of the Criminal Division, DOJ).
(U) Service of summons or subpoena - A summons or subpoena issued by the Secretary
of the Treasury or the Attorney General may be served on the foreign bank in the United
States if the foreign bank has a representative in the United States or in a foreign country
pursuant to any mutual legal assistance treaty, multilateral agreement, or other request for
international law enforcement assistance.
(U) Other provisions of 31 U.S.C. § 5318 - The law requires domestic financial
institutions that maintain correspondent accounts for foreign banks to maintain records
identifying the owners of the foreign bank and the name and address of a person who
resides in the United States and is authorized to accept service of legal process for ,
records regarding the correspondent account. In addition, within seven days after
receiving a written request from a federal law enforcement officer, the domestic financial
institution must provide the identifying information. Finally, a domestic financial
institution must terminate any correspondent relationship with a foreign bank no later
than ten business days after receiving written notice from the Secretary of the Treasury or
the AG (in each case after consultation with the other) that the foreign bank has failed to
either to comply with the subpoena or to initiate proceedings to contest it. These new
provisions will assist the FBI in obtaining information concerning deposits of funds into
foreign banks that have correspondent accounts with U.S. banks, particularly in instances
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where the United States cannot obtain cooperation from other governments or foreign
financial institutions.
(U) Use of this new authority, however, is likely to be controversial and may adversely
affect U.S. bilateral or multilateral law enforcement relations. Therefore, USAs are
required to obtain approval from the AFMLS, Criminal Division, DOJ, prior to issuing a
subpoena or summons.
Sec. 371. (U) Bulk Cash Smuggling into or out of the United States (31 U.S.C. § 5332)
(U) This section:
(1) (U) Makes the act of smuggling bulk cash itself a criminal offense.
(2) (U) Authorizes forfeiture of any cash or instruments of the smuggling offense.
(3) (U) Emphasizes the seriousness of the act of bulk cash smuggling.
(U) Whoever, with the intent to evade a currency reporting requirement under 31 U.S.C.
§ 53 1 6, knowingly conceals more than $ 1 0,000 in currency or other monetary
instruments on the person of such individual or in any conveyance, article of luggage,
merchandise, or other container, and transports or transfers or attempts to transport or
transfer such currency or monetary instruments from a place within the United States to a
place outside of the United States, or from a place outside the United States to a place
within the United States, is guilty of a currency smuggling offense and subject to
punishment.
(U) For purposes of this section, the concealment of currency on the person of any
individual includes concealment in any article of clothing worn by the individual or in
any luggage, backpack, or other container worn or carried by such individual.
Sec. 372. (U) Forfeiture in Currency Reporting Cases
(U) This section authorizes civil and criminal forfeiture for violations of currency
reporting laws and regulations. (See 31 U.S.C. § 5317.)
Sec. 373. (U) Illegal Money Transmitting Businesses
(U) This section modified 18 U.S.C. § 1960, Prohibition of Unlicensed Money .
Transmitting Businesses, which previously made it illegal to run a money transmitting
business without a license only if the individual was aware of such licensing
requirements. The amendment specifically states that “Whoever knowingly conducts,
controls, manages, supervises, directs, or owns all or part of an unlicensed money
transmitting business, shall be fined in accordance with this title or imprisoned not more
than 5 years, or both.”
(U) The term "unlicensed money transmitting business" means a money transmitting
business that affects interstate or foreign commerce in any manner or degree and is
operated without an appropriate money transmitting license in a state where such
operation is punishable as a misdemeanor or a felony under state law, whether or not the
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defendant knew that the operation was required to be licensed or that the operation was
so punishable, fails to comply with the money transmitting business registration
requirements under 31 U.S.C. § 5330, or regulations prescribed under such section; or
otherwise involves the transportation or transmission of funds that are known to the
defendant to have been derived from a criminal offense or are intended to be used to be
used to promote or support unlawful activity.
Sec. 813. (U) Inclusion of Acts of Terrorism as Racketeering Activity
(U) This section includes terrorism as a predicate offense for the RICO Act, which
proscribes acquiring or operating an enterprise whose activities affect interstate or foreign
commerce.
(U) In addition, the USA PATRIOT Improvement and Reauthorization Act of 2005
renewed and enhanced the USA PATRIOT Act. The following is one such enhancement:
Sec. 405. (U) Money Laundering Through Hawalas
(U) 18 U.S.C. § 1956 (a)(1) is amended by adding at the end the following: “For
purposes of this paragraph, a financial transaction shall be considered to be one involving
the proceeds of SUA if it is part of a set of parallel or dependent transactions, any one of
which involves the proceeds of SUA, and all of which are part of a single plan or
arrangement.”
(U) This section has clear implications for Hawalas. Consider the following example:
Illicit proceeds are provided to the Hawaladar who deposits them into the Hawaladar’s
bank account. Funds from a separate Hawaladar - controlled account are then transferred
to the recipient overseas. This section now considers both transactions to be money
laundering.
6. (U) Related Statutes and Regulations
(U) Interstate Transportation in Aid of Racketeering (ITAR) Statute
(U) The money laundering violations (18 U.S.C. §§ 1956 and 1957) and Title 31
violations handling the reporting of currency transactions (acts indictable under
Subchapter II of Chapter 53 of Title 31, U.S. Code) have been added as predicate
offenses (unlawful activities) for the ITAR Statute (18 U.S.C. § 1952). •
(U) Interception of Wire, Oral, or Electronic Communications
(U) 18 U.S.C. § 2516, also referred to as Title m, includes the money laundering
violations (18 U.S.C. §§ 1956 and 1957) within the enumerated offenses that authorize
the interception of communications.
(U) Termination of Correspondent Relationship (31 U.S.C. § 5318(k)(3)(C))
(1) (U) Termination upon receipt of notice - A financial institution must terminate
any correspondent relationship with a foreign bank no later than ten business days
after receiving written notice from the Secretary of the Treasury or the Attorney
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General (in each case, after consultation with the other) that the foreign bank has
failed to comply with a summons or subpoena; or to initiate proceedings in a U.S.
court contesting such summons or subpoena.
(2) (U) Limitation on liability - A financial institution may not be liable to any person
in any court or arbitration proceeding for terminating a correspondent relationship.
(3) (U) Failure to terminate relationship - Failure to terminate a correspondent
relationship renders the financial institution liable for a civil penalty of up to
$10,000 per day until the correspondent relationship is terminated.
(U) Foreign Bank Records - Acceptance of Service (31 U.S.C. § 318(k) (3)(B))
(1) (U) Maintaining records in the United States - Any financial institution that
maintains a correspondent account in the United States for a foreign bank must
maintain records in the United States identifying the owners of such foreign bank
and the name and address of a person who resides in the United States and is
authorized to accept service of legal process for records regarding the
correspondent account.
(2) (U) Law enforcement request - When the covered financial institution receives a
written request from a federal law enforcement officer for information required to
be maintained as stated in the previous paragraph, it must provide the information
to die requesting officer no later than seven days after receiving the request.
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(U) Appendix B: FATF Forty Recommendations
(U) (Please note that the Forty Recommendations set forth below have been
reprinted verbatim from the FATF Web site, WNvw.fatg-gafi.org, and thus contain
the European spellings of certain words.)
A. (U) Legal Systems
(U) Scope of the criminal offence of money laundering
1. (U) Countries should criminalize money laundering on the basis of the
United Nations Convention against Elicit Traffic in Narcotic Drugs and
Psychotropic Substances, 1988 (the Vienna Convention) and the United
Nations Convention against Transnational Organized Crime, 2000 (the
Palermo Convention).
(U) Countries should apply the crime of money laundering to all serious
offences, with a view to including the widest range of predicate offences.
Predicate offences may be described by reference to all offences, or to a
threshold linked either to a category of serious offences or to the penalty
of imprisonment applicable to the predicate offence (threshold approach),
or to a list of predicate offences, or a combination of these approaches.
(U) Where countries apply a threshold approach, predicate offences should
at a minimum comprise all offences that fall within the category of serious
offences under their national law or should include offences which are
punishable by a maximum penalty of more than one year’s imprisonment
or for those countries that have a minimum threshold for offences in their
legal system, predicate offences should comprise all offences, which are
punished by a minimum penalty of more than six months imprisonment.
(U) Whichever approach is adopted, each country should at a minimum
include a range of offences within each of the designated categories of
offences.
(U) Predicate offences for money laundering should extend to conduct that
occurred in another country, which constitutes an offence in that country,
and which would have constituted a predicate offence had it occurred
domestically. Countries may provide that the only prerequisite is that the
conduct would have constituted a predicate offence had it occurred
domestically.
(U) Countries may provide that the offence of money laundering does not
apply to persons who committed the predicate offence, where this is
required by fundamental principles of their domestic law.
2. (U) Countries should ensure that:
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a) (U) The intent and knowledge required to prove the offence of
money laundering is consistent with the standards set forth in the
Vienna and Palermo Conventions, including the concept that such
mental state may be inferred from objective factual circumstances.
b) (U) Criminal liability, and, where that is not possible, civil or
administrative liability, should apply to legal persons. This should
not preclude parallel criminal, civil or administrative proceedings
with respect to legal persons in countries in which such forms of
liability are available. Legal persons should be subject to effective,
proportionate and dissuasive sanctions. Such measures should be
without prejudice to the criminal liability of individuals.
(U) Provisional measures and confiscation
3. (U) Countries should adopt measures similar to those set forth in the
Vienna and Palermo Conventions,- including legislative measures, to
enable their competent authorities to confiscate property laundered,
proceeds from money laundering or predicate offences, instrumentalities
used in or intended for use in the commission of these offences, or
property of corresponding value, without prejudicing the rights of bona
fide third parties.
(U) Such measures should include the authority to: (a) identify, trace and
evaluate property which is subject to confiscation; (b) carry out
provisional measures, such as freezing and seizing, to prevent any dealing,
transfer or disposal of such property; (c) take steps that will prevent or
void actions that prejudice the State’s ability to recover property that is
subject to confiscation; and (d) take any appropriate investigative
measures.
(U) Countries may consider adopting measures that allow such proceeds
or instrumentalities to be confiscated without requiring a criminal
conviction, or which require an offender to demonstrate the lawful origin
of the property alleged to be liable to confiscation, to the extent that such a
requirement is consistent with the principles of their domestic law.
B. (U) Measures to be Taken by Financial Institutions and Non-
fxnancial Businesses and Professions to Prevent Money Laundering
and Terrorist Financing
4. (U) Countries should ensure that financial institution secrecy laws do
not inhibit implementation of the FATF Recommendations.
(U) Customer due diligence and record-keeping
5. (U) Financial institutions should not keep anonymous accounts or
accounts in obviously fictitious names.
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(U) Financial institutions should undertake customer due diligence
measures, including identifying and verifying the identity of their
customers, when:
a) (U) Establishing business relations.
b) (U) Carrying out occasional transactions: (i) above the
applicable designated threshold or (ii) that are wire transfers in the
circumstances covered by the Interpretative Note to Special
Recommendation VII.
c) (U) There is a suspicion of money laundering or terrorist
financing.
d) (U) The financial institution has doubts about the veracity or
adequacy of previously obtained customer identification data.
(U) The customer due diligence (CDD) measures to be taken are as
follows:
a) (U) Identify the customer and verify the customer’s identity
using reliable, independent source documents, data, or information.
b) (U) Identify the beneficial owner, and take reasonable measures
to verify the identity of the beneficial owner so that the financial
institution is satisfied that it knows who the beneficial owner is.
For legal persons and arrangements, this should include financial
institutions taking reasonable measures to understand the
ownership and control structure of the customer.
c) (U) Obtain information on the purpose and intended nature of
the business relationship.
d) (U) Conduct ongoing due diligence on the business relationship
and scrutiny of transactions undertaken throughout the course of
that relationship to ensure that the transactions being conducted are
consistent with the institution’s knowledge of the customer, their
business, and risk profile, including, where necessary, the source
of funds.
(U) Financial institutions should apply each of the above CDD measures,
but may determine the extent of such measures on a risk sensitive basis
depending on the type of customer, business relationship, or transaction.
The measures that are taken should be consistent with any guidelines
issued by competent authorities. For higher risk categories, financial
institutions should perform enhanced due diligence. In certain
circumstances, where there are low risks, countries may decide that
financial institutions can apply reduced or simplified measures.
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(U) Financial institutions should verify the identity of the customer and
beneficial owner before or during the course of establishing a business
relationship or conducting transactions for occasional customers.
Countries may permit financial institutions to complete the verification as
soon as reasonably practicable following the establishment of the
relationship, where the money laundering risks are effectively managed
and where this is essential not to interrupt the normal conduct of business.
(U) Where the financial institution is unable to comply with paragraphs (a)
to (c) above, it should not open the account, commence business relations,
or perform the transaction; or should terminate the business relationship;
and should consider making a suspicious transactions report in relation to
the customer.
(U) These requirements should apply to all new customers, though
financial institutions should also apply this Recommendation to existing
customers on the basis of materiality and risk, and should conduct due
diligence on such existing relationships at appropriate times.
6. {U) In addition to performing normal due diligence measures relative to
politically exposed persons, financial institutions should:
a) (U) Have appropriate risk management systems to determine
whether the customer is a politically exposed person.
b) (U) Obtain senior management approval for establishing
business relationships with such customers.
c) (U) Take reasonable measures to establish the source of wealth
and source of funds.
d) (U) Conduct enhanced ongoing monitoring of the business
relationship.
7. (U) In addition to performing normal due-diligence measures relative to
cross-border correspondent banking and other similar relationships,
financial institutions should:
a) (U) Gather sufficient information about a respondent institution
to understand fully the nature of the respondent’s business and to
determine from publicly available information the reputation of the
institution and the quality of supervision, including whether it has
been subject to a money laundering or terrorist financing
investigation or regulatory action.
b) (U) Assess the respondent institution’s anti-money laundering
and terrorist financing controls.
c) (U) Obtain approval from senior management before
establishing new correspondent relationships.
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d) (U) Document the respective responsibilities of each institution.
e) (XJ) With respect to “payable-through accounts”, be satisfied that
the respondent bank has verified the identity of and performed on-
going due diligence on the customers having direct access to
accounts of the correspondent and that it is able to provide relevant
customer identification data upon request to the correspondent
bank.
8. (U) Financial institutions should pay special attention to any money
laundering threats that may arise from new or developing technologies that
might favor anonymity, and take measures, if needed, to prevent their use
in money laundering schemes. In particular, financial institutions should
have policies and procedures in place to address any specific risks
associated with non-face to face business relationships or transactions.
9. (U) Countries may permit financial institutions to rely on intermediaries
or other third parties to perform elements (a) - (c) of the CDD process or
to introduce business, provided that the criteria set out below are met.
Where such reliance is permitted, the ultimate responsibility for customer
identification and verification remains with the financial institution relying
on the third party.
(U) The criteria that should be met are as follows:
a) (U) A financial institution relying upon a third party should
immediately obtain the necessary information concerning elements
(a) - (c) of the CDD process. Financial institutions should take
adequate steps to satisfy themselves that copies of identification
data and other relevant documentation relating to the CDD
requirements will be made available from the third party upon
request without delay.
b) (U) The financial institution should satisfy itself that the third
party is regulated and supervised for, and has measures in place to
comply with CDD requirements in line with Recommendations 5
and 10,
(U) It is left to each country to determine in which countries the third party
that meets the conditions can be based, having regard to information
available on countries that do not or do not adequately apply the FATF
Recommendations.
10. (U) Financial institutions should maintain, for at least five years, all
necessary records on transactions, both domestic or international, to
enable them to comply swiftly with information requests from the
competent authorities. Such records must be sufficient to permit
reconstruction of individual transactions (including the amounts and types
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of currency involved if any) so as to provide, if necessary, evidence for
prosecution of criminal activity.
(U) Financial institutions should keep records on the identification data
obtained through the customer due diligence process (e.g. copies or
records of official identification documents like passports, identity cards,
driving licenses or similar documents), account files and business
correspondence for at least five years after the business relationship is
ended. The identification data and transaction records should be available
to domestic competent authorities upon appropriate authority.
11. (U) Financial institutions should pay special attention to all complex,
unusual large transactions, and all unusual patterns of transactions, which
have no apparent economic or visible lawful purpose. The background and
purpose of such transactions should, as far as possible, be examined, the
findings established in writing, and be available to help competent
authorities and auditors.
12. (U) The customer due diligence and record-keeping requirements set
out in Recommendations 5, 6, and 8 to 1 1 apply to designated non-
financial businesses and professions in the following situations:
a) (U) Casinos - when customers engage in financial transactions
equal to or above the applicable designated threshold.
b) (U) Real estate agents - when they are involved in transactions
for their client concerning the buying and selling of real estate.
c) (U) Dealers in precious metals and dealers in precious stones -
when they engage in any cash transaction with a customer equal to
or above the applicable designated threshold.
d) (U) Lawyers, notaries, other independent legal professionals and
accountants when they prepare for or carry out transactions for
their client concerning the following activities:
o (U) buying and selling of real estate;
o (U) managing of client money, securities or other assets;
o (U) management of bank, savings or securities accounts;
o (U) organization of contributions for the creation, operation
or management of companies;
o (U) creation, operation or management of legal persons or
arrangements, and buying and selling of business entities.
e) (U) Trust and company service providers when they prepare for
or carry out transactions for a client concerning the activities listed
in the definition in the Glossary.
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(U) Reporting of suspicious transactions and compliance
13. (U) If a financial institution suspects or has reasonable grounds to
suspect that funds are the proceeds of a criminal activity; or are related to
terrorist financing, it should be required, directly by law or regulation, to
report promptly its suspicions to the financial intelligence unit (FIU).
14. (U) Financial institutions, their directors, officers and employees
should be:
(U) Protected by legal provisions from criminal and civil liability for
breach of any restriction on disclosure of information imposed by contract
or by any legislative, regulatory or administrative provision, if they report
their suspicions in good faith to the FIU, even if they did not know
precisely what the underlying criminal activity was, and regardless of
whether illegal activity actually occurred.
Prohibited by law from disclosing the fact that a suspicious transaction
report (STR) or related information is being reported to the FIU.
15. (U) Financial institutions should develop programs against money
laundering and terrorist financing. These programs should include:
(U) The development of internal policies, procedures and controls, .
including appropriate compliance management arrangements, and
adequate screening procedures to ensure high standards when hiring
employees.
(U) An ongoing employee training program.
(U) An audit function to test the system. ,
16. (U) The requirements set out in Recommendations 13 to 15, and 21
apply to all designated non-financial businesses and professions, subject to
the following qualifications:
a) (U) Lawyers, notaries, other independent legal professionals and
accountants should be required to report suspicious transactions
when, on behalf of or for a client, they engage in a financial
transaction in relation to the activities described in
Recommendation 12(d). Countries are strongly encouraged to
extend the reporting requirement to the rest of the professional
activities of accountants, including auditing.
b) (U) Dealers in precious metals and dealers in precious stones
should be required to report suspicious transactions when they
engage in any cash transaction with a customer equal to or above
the applicable designated. threshold.
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c) (U) Trust and company service providers should be required to
report suspicious transactions for a client when, on behalf of or for
a client, they engage in a transaction in relation to the activities
referred to Recommendation 12(e).
(U) Lawyers, notaries, other independent legal professionals, and
accountants acting as independent legal professionals, are not required to
report their suspicions if the relevant information was obtained in
circumstances where they are subject to professional secrecy or legal
professional privilege.
(U) Other measures to deter money laundering and terrorist financing
17. (U) Countries should ensure that effective, proportionate and
dissuasive sanctions, whether criminal, civil or administrative, are
available to deal with natural or legal persons covered by these
Recommendations that fail to comply with anti-money laundering or
terrorist financing requirements.
18. (U) Countries should not approve the establishment or accept the
continued operation of shell banks. Financial institutions should refuse to
enter into, or continue, a correspondent banking relationship with shell
banks. Financial institutions should also guard against establishing
relations with respondent foreign financial institutions that permit their
accounts to be used by shell banks.
19. (U) Countries should consider the feasibility and utility of a system
where banks and other financial institutions and intermediaries would
report all domestic and international currency transactions above a fixed
amount, to a national central agency with a computerized data base,
available to competent authorities for use in money laundering or terrorist
financing cases, subject to strict safeguards to ensure proper use of the
information.
20. (U) Countries should consider applying theFATF Recommendations
to businesses and professions, other than designated non-financial
businesses and professions that pose a money laundering or terrorist
financing risk.
(U) Countries should further encourage the development of modem and
secure techniques of money management that are less vulnerable to money
laundering.
(U) Measures to be taken with respect to countries that do not or
insufficiently comply with the FATF Recommendations
21 . (U) Financial institutions should give special attention to business
relationships and transactions with persons, including companies and
financial institutions, from countries which do not or insufficiently apply
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the FATF Recommendations. Whenever these transactions have no
apparent economic or visible lawful purpose, their background and
purpose should, as far as possible, be examined, the findings established in
writing, and be available to help competent authorities. Where such a
country continues not to apply or insufficiently applies the FATF
Recommendations, countries should be able to apply appropriate
countermeasures.
22. (U) Financial institutions should ensure that the principles applicable
to financial institutions, which are mentioned above are also applied to
branches and majority owned subsidiaries located abroad, especially in
countries which do not or insufficiently apply the FATF
Recommendations, to the extent that local applicable laws and regulations
permit. When local applicable laws and regulations prohibit this
implementation, competent authorities in the country of the parent
institution should be informed by the financial institutions that they cannot
apply the FATF Recommendations.
(U) Regulation and supervision
23. (U) Countries should ensure that financial institutions are subject to
adequate regulation and supervision and are effectively implementing the
FATF Recommendations. Competent authorities should take the necessary
legal or regulatory measures to prevent criminals or their associates from
holding or being the beneficial owner of a significant or controlling
interest or holding a management function in a financial institution.
(U) For financial institutions subject to the Core Principles, the regulatory
and supervisory measures that apply for prudential purposes and which are
also relevant to money laundering, should apply in a similar manner for
anti-money laundering and terrorist financing purposes.
(U) Other financial institutions should be licensed or registered and
appropriately regulated, and subject to supervision or oversight for anti-
money laundering purposes, having regard to the risk of money laundering
or terrorist financing in that sector. At a minimum, businesses providing a
service of money or value transfer, or of money or currency changing
should be licensed or registered, and subject to effective systems for
monitoring and ensuring compliance with national requirements to combat
money laundering and terrorist financing.
24. (U) Designated non-financial businesses and professions should be
subject to regulatory and supervisory measures as set out below.
a) (U) Casinos should be subject to a comprehensive
regulatory and supervisory regime that ensures that they
have effectively implemented the necessary anti-money
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laundering and terrorist-financing measures. At a
minimum:
o (U) Casinos should be licensed
o (U) Competent authorities should take the necessary legal
or regulatory measures to prevent criminals or their
associates from holding or being the beneficial owner of a
significant or controlling interest, holding a management
function in, or being an operator of a casino
o (U) Competent authorities should ensure that casinos are
effectively supervised for compliance with requirements to
combat money laundering and terrorist financing.
b) (U) Countries should ensure that the other categories of
designated non-financial businesses and professions are subject to
effective systems for monitoring and ensuring their compliance
with requirements to combat money laundering and terrorist
financing. This should be performed on a risk-sensitive basis. This
may be performed by a government authority or by an appropriate
self-regulatory organization, provided that such an organization
can ensure that its members comply with their obligations to
combat money laundering and terrorist financing.
25. (U) The competent authorities should establish guidelines, and provide
feedback which will assist financial institutions and designated non-
financial businesses and professions in applying national measures to
combat money laundering and terrorist financing, and in particular, in
detecting and reporting suspicious transactions.
C. (U) Institutional and Other Measures Necessary in Systems for
Combating Money Laundering and Terrorist Financing
(U) Competent authorities, their powers and resources
26. (U) Countries should establish a FIU that serves as a national centre
for the receiving (and, as permitted, requesting), analysis and
dissemination of STR and other information regarding potential money
laundering or terrorist financing. The FIU should have access, directly or
indirectly, on a timely basis to the financial, administrative and law
enforcement information that it requires to properly undertake its
functions, including the analysis of STR.
27. (U) Countries should ensure that designated law enforcement
authorities have responsibility for money laundering and terrorist
financing investigations. Countries are encouraged to support and develop,
as far as possible, special investigative techniques suitable for the
investigation of money laundering, such as controlled delivery, undercover
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operations and other relevant techniques. Countries are also encouraged to
use other effective mechanisms such as the use of permanent or temporary
groups specialized in asset investigation, and co-operative investigations
with appropriate competent authorities in other countries.
28. (U) When conducting investigations of money laundering and
underlying predicate offences, competent authorities should be able to
obtain documents and information for use in those investigations, and in
prosecutions and related actions. This should include powers to use
compulsory measures for the production of records held by financial
institutions and other persons, for the search of persons and premises, and
for the seizure and obtaining of evidence.
29. (U) Supervisors should have adequate powers to monitor and ensure
compliance by financial institutions with requirements to combat money
laundering and terrorist financing, including the authority to conduct
inspections. They should be authorized to compel production of any
information from financial institutions that is relevant to monitoring such
compliance, and to impose adequate administrative sanctions for failure to
comply with such requirements.
30. (U) Countries should provide their competent authorities involved in
combating money laundering and terrorist financing with adequate
financial, human and technical resources. Countries should have in place
processes to ensure that the staff of those authorities are of high integrity.
31. (U) Countries should ensure that policy makers, the FIU, law
enforcement and supervisors have effective mechanisms in place which
enable them to co-operate, and where appropriate coordinate domestically
with each other concerning the development and implementation of
policies and activities to combat money laundering and terrorist financing.
32. (U) Countries should ensure that their competent authorities can
review the effectiveness of their systems to combat money laundering and
terrorist financing systems by maintaining comprehensive statistics on
matters relevant to the effectiveness and efficiency of such systems. This
should include statistics on the STR received and disseminated; on money
laundering and terrorist financing investigations, prosecutions and
convictions; on property frozen, seized and confiscated; and on mutual
legal assistance or other international requests for co-operation.
(U) Transparency of legal persons and arrangements
33. (U) Countries should take measures to prevent the unlawful use of
legal persons by money launderers. Countries should ensure that there is
adequate, accurate and timely information on the beneficial ownership and
control of legal persons that can be obtained or accessed in a timely
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fashion by competent authorities. In particular, countries that have legal
persons who are able to issue bearer shares should take appropriate
measures to ensure that they are not misused for money laundering and be
able to demonstrate the adequacy of those measures. Countries could
consider measures to facilitate access to beneficial ownership and control
information to financial institutions undertaking the requirements set out
in Recommendation 5.
34. (U) Countries should take measures to prevent the unlawful use of
legal arrangements by money Iaunderers. In particular, countries should
ensure that there is adequate, accurate and timely information on express
trusts, including information on the settlor, trustee and beneficiaries that
can be obtained or accessed in a timely fashion by competent authorities.
Countries could consider measures to facilitate access to beneficial
ownership and control information to financial institutions undertaking the
requirements set out in Recommendation 5.
D. (U) International Co-Operation
35. (U) Countries should take immediate steps to become party to and
implement fully the Vienna Convention, the Palermo Convention, and the
1999 United Nations International Convention for the Suppression of the
Financing of Terrorism. Countries are also encouraged to ratify and
implement other relevant international conventions, such as the 1990
Council of Europe Convention on Laundering, Search, Seizure and
Confiscation of the Proceeds from Crime and the 2002 Inter-American
Convention against Terrorism.
(U) Mutual legal assistance and extradition
36. (U) Countries should rapidly, constructively and effectively provide
the widest possible range of mutual legal assistance in relation to money
laundering and terrorist financing investigations, prosecutions, and related
proceedings. In particular, countries should:
a) (U) Not prohibit or place unreasonable or unduly restrictive
conditions on the provision of mutual legal assistance.
b) (U) Ensure that they have clear and efficient processes for the
execution of mutual legal assistance requests.
c) (U) Not refuse to execute a request for mutual legal assistance
on the sole ground that the offence is also considered to involve
fiscal matters.
d) (U) Not refuse to execute a request for mutual legal assistance
on the grounds that laws require financial institutions to maintain
secrecy or confidentiality.
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(U) Countries should ensure that the powers of their competent authorities
required under Recommendation 28 are also available for use in response
to requests for mutual legal assistance, and if consistent with their
domestic framework, in response to direct requests from foreign judicial
or law enforcement authorities to domestic counterparts.
(U) To avoid conflicts of jurisdiction, consideration should be given to
devising and applying mechanisms for determining the best venue for
prosecution of defendants in the interests of justice in cases that are
subject to prosecution in more than one country.
37. (U) Countries should, to the greatest extent possible, render mutual
legal assistance notwithstanding the absence of dual criminality.
(U) Where dual criminality is required for mutual legal assistance or
extradition, that requirement should be deemed to be satisfied regardless
of whether both countries place the offence within the same category of
offence or denominate the offence by the same terminology, provided that
both countries criminalize the conduct underlying the offence.
38. (U) There should be authority to take expeditious action in response to
requests by foreign countries to identify, freeze, seize and confiscate
property laundered, proceeds from money laundering or predicate offences,
instrumentalities used in or intended for use in the commission of these
offences, or property of corresponding value. There should also be
arrangements for coordinating seizure and confiscation proceedings,
which may include the sharing of confiscated assets.
39. (U) Countries should recognize money laundering as an extraditable
offence. Each country should either extradite its own nationals, or where a
country does not do so solely on the grounds of nationality, that country
should, at the request of the country seeking extradition, submit the case
without undue delay to its competent authorities for the purpose of
prosecution of the offences set forth in the request. Those authorities
should take their decision and conduct their proceedings in the same
manner as in the case of any other offence of a serious nature under the
domestic law of that country. The countries concerned should cooperate
with each other, in particular on procedural and evidentiary aspects, to
ensure the efficiency of such prosecutions.
(U) Subject to their legal frameworks, countries may consider simplifying
extradition by allowing direct transmission of extradition requests between
appropriate ministries, extraditing persons based only on warrants of
arrests or judgments, and/or introducing a simplified extradition of
consenting persons who waive formal extradition proceedings.
(U) Other forms of co-operation
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40. (U) Countries should ensure that their competent authorities provide
the widest possible range of international co-operation to their foreign
counterparts. There should be clear and effective gateways to facilitate the
prompt and constructive exchange directly between counterparts, either
spontaneously or upon request, of information relating to both money
laundering and the underlying predicate offences. Exchanges should be
permitted without unduly restrictive conditions. In particular:
a) (U) Competent authorities should not refuse a request for
assistance on the sole ground that the request is also considered to
involve fiscal matters.
b) (U) Countries should not invoke laws that require financial
institutions to maintain secrecy or confidentiality as a ground for
refusing to provide co-operation.
c) (U) Competent authorities should be able to conduct inquiries;
and where possible, investigations; on behalf of foreign
counterparts.
(U) Where the ability to obtain information sought by a foreign competent
authority is not within the mandate of its counterpart, countries are also
encouraged to permit a prompt and constructive exchange of information
with non-counterparts. Co-operation with foreign authorities other than
counterparts could occur directly or indirectly. When uncertain about the
appropriate avenue to follow, competent authorities should first contact
their foreign counterparts for assistance.
(U) Countries should establish controls and safeguards to ensure that
information exchanged by competent authorities is used only in an
authorized manner, consistent with their obligations concerning privacy
and data protection.
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(U//FOUO) Appendix C: Memorandum of Understanding
Among the Secretary of the Treasury, the Attorney General,
and the Postmaster General Regarding Money Laundering
Investigations
(U//FOUO) This Memorandum of Understanding (MOU) constitutes an
agreement among the Secretary of the Treasury (the Secretary), the Attorney
General, and the Postmaster General as to the investigatory authority and
procedures of Treasury and Justice Bureaus and the Postal Service under 18
U.S.C sections 1956 and 1957, as amended by the Anti-Drug Abuse Act of 1988,
Pub. L. 100-690 (Nov. 18, 1988). This replaces a previous MOU on this subject
between the Secretary and the Attorney General effective May 20, 1987.
Section I. (U//FOUO) Purpose
(U//FOUO) The Attorney General, the Secretary and the Postmaster
General have entered into this MOU in order to encourage effective and
harmonious cooperation by Treasury and Justice bureaus and the Postal Service in
the development of cases by bureaus with appropriate experience, to reduce the
possibility of duplicative investigations, to minimize the potential for dangerous
situations which might arise from uncoordinated multi-bureau efforts, and to
enhance the potential for successful prosecution in cases presented to the various
U.S. Attorneys.
(U//FOUO) As clearly stated in the legislative history of the Act, this
MOU does not confer any rights on any third party, including a defendant or other
party in litigation with the U.S. The fact that a bureau investigates a violation of
section 1956 or section 1 957 that should have been investigated by another bureau
under the terms of this MOU, or that any agency not a party to this MOU
investigates a violation of section 1 956 or section 1957, confers no rights and
provides no defense to any party,
(U//FOUO) While this MOU allocates jurisdiction to investigate violations
of sections 1956 and 1957, nothing in this MOU is intended to augment or
diminish the investigatory authority of any Justice or Treasury bureau or the
Postal Service over violations of any federal criminal law, independent of the
money laundering statute, or to alter the existing allocation or delegation of such
authority. This MOU governs all investigations involving 18 U.S.C. 1956 and
1957 and is intended to be used together with MOUs presently existing between
the bureaus. This MOU does not supersede the provision of 26 U.S.C. 6103
(confidentiality and disclosure of returns and return information).
Section II. (U//FOUO) Definitions
1. (U//FOUO) 'Bureau' includes the Postal Inspection Service.
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2. (U//FOUO) ‘Treasury bureaus’ mean the Internal Revenue Service
(IRS), the U.S. Customs Service, the Bureau of Alcohol, Tobacco, and Firearms
(ATF), and the U.S. Secret Service.
3. (U//FOUO) ‘Justice bureaus’ means the Drug Enforcement
Administration (DEA) and the Federal Bureau of Investigation (FBI).
4. (U//FOUO) ‘Violations of section 1956’ refers to both civil and
criminal violations.
5. (U//FOUO) ‘Specified unlawful activities’ has the definition set forth in
18 U.S.C. section 1956 (c) (7).
6. (U//FOUO) ‘Justice Department attorney’ means the appropriate
Assistant U.S. Attorney or designated Justice Department attorney assigned to the
prosecution of the case.
Section III. (U//FOUO) Investigatory Jurisdiction
(U//FOUO) A bureau's investigatory actions in pursuit of a section 1956 or
1957 violation shall be conducted only in those areas in which the investigating
bureau has existing jurisdiction, independent of the money laundering statutes, as
set forth in this Section.
A. (U//FOUO) Treasury Bureaus
1. (U//FOUO) Internal Revenue Service
(U//FOUO) The Internal Revenue Service will have investigative
jurisdiction over all violations of Section 1956 and 1957 where the underlying
conduct is subject to investigation under Title 26 or the BSA.
2. (U//FOUO) U.S. Customs Service
a. (U//FOUO) The U.S. Customs Service will have investigatory
jurisdiction over violations of section 1956 or section 1957 involving the
following specified unlawful activities: criminal offenses under 18 U.S.C. section
542, (relating to entry of goods by means of false statements), section 545
' (relating to the smuggling of goods into the U.S.), section 549 (relating to
removing goods from Customs custody), section 659 (relating to theft from
foreign shipment), sections 1461-63 and 1465 (relating to illegal import or export
of obscene matter), sections 2251-52 (relating to imports or exports of material
involving sexual exploitation of children), section 2314 (relating to foreign
transportation of stolen property), and section 2321 (relating to the import or
export of certain motor vehicles or vehicle parts); 19 U.S.C. section 1590 (relating
to aviation smuggling); 21 U.S.C. section 857 (relating to the illegal import or
export of drug paraphernalia); criminal offenses under section 11 of the Export
Administration Act of 1979 (50 U.S.C. App. section 2410); criminal offenses
under section 206 of the International Emergency Economic Powers Act (50
U.S.C. 1705); criminal offenses under section 16 of the Trading with the Enemy
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Act (50 U.S.C. App. 16); and criminal offenses under section 38(c) of the Arms
Export Control Act (22 U.S.C. section 2778) (relating to exportation, in transit,
temporary import, or temporary export transactions).
b. (U//FOUO) The U.S. Customs Service will have investigatory
jurisdiction over violations of section 1956(a) (2) (B)(ii), involving the
international transportation of monetary instruments or funds which are proceeds
of some form of unlawful activity and where the defendant knew that the
transportation was designed in whole or in part to avoid a transaction reporting
requirement under 31 U.S.C. 5316 (Reports on exporting and importing monetary
instruments).
3. (U//FOUO) U.S. Secret Service
(U//FOUO) The U.S. Secret Service will have investigatory jurisdiction
over violations of section 1956 or section 1957 involving the SUA of an offense
under 18 U.S.C. sections 471-473 (counterfeiting of obligations or securities of
the United States), sections 500-503 (counterfeiting of blank or postal money
orders, postage stamps, foreign governments postage and revenue stamps, and
postmarking stamps), section 657 (involving theft, embezzlement or
misapplication by employees of the Federal Deposit Insurance Company [FDIC]),
and section 1029 (fraud and related activity in connection with access devices).
4. (U//FOUO) Bureau of Alcohol, Tobacco and Firearms
(U//FOUO) The Bureau of Alcohol, Tobacco and Firearms will have
investigatory jurisdiction over violations of section 1956 or section 1957
involving the SUA of an offense under 18 U.S.C. sections 2341 -2346 (trafficking
in contraband cigarettes); section 38(c) of the Arms Export Control Act, 22 U.S.C
section 2778 (relating to the importation of items on the U.S. Munitions Import
List, except those relating to exportation, in transit, temporary import, or
temporary export transactions); and 18 U.S.C. 1952 (relating to traveling in
interstate commerce, with respect to liquor on which federal excise tax has not
been paid and arson); or any act or activity constituting an offense listed in 18
U.S.C. 1961(1), with respect to any act or threat involving arson, which is
chargeable under State law and punishable for more than one year.
B. (U//FOUO) Justice Bureaus
1. (U//FOUO) Federal Bureau of Investigation
(U//FOUO) The Federal Bureau of Investigation will have investigatory
jurisdiction over violations of section 1956 or section 1957 involving unlawful
activities of an offense under 18 U.S.C. section 152 (relating to concealment of
assets; false oaths and claims; bribery), section 215 (relating to commissions or
gifts for procuring loans), section 513 (relating to securities of States and private
entities), section 641 (relating to public money, property, or records), section 656
(relating to theft, embezzlement, or misapplication by bank officer or employee),
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section 657 (relating to lending, credit, and insurance institutions), 658 (relating to
property mortgaged or pledged to farm credit agencies), section 666 (relating to
theft or bribery concerning programs receiving Federal funds), sections 793,. 794,
or 798 (relating to espionage), section 875 (relating to interstate communications),
section 1201 (relating to kidnapping), section 1203 (relating to hostage taking),
section 1344 (relating to bank fraud), or section 21 13 or 21 14 (relating to bank
and postal robbery and theft), sections 2251, 2251 A, 2252, and 2258 (relating to
sexual exploitation of children); section 2319 (relating to copyright infringement);
or section 2320 (relating to trafficking in counterfeit goods and services); or 7
U.S.C. section 2024 (relating to food stamp fraud); 21 U.S.C. section 830
(relating to precursor chemicals), section 857 (relating to transportation of drug
paraphernalia) and, with respect to a financial transaction occurring in whole or in
part in the U.S., an offense against a foreign nation involving the manufacture,
importation, sale, or distribution of a controlled substance (as such term is defined
for the purposes of the Controlled Substances Act); and any act or acts
constituting a continuing criminal enterprise, as that term is defined in section 408
of the Controlled Substances Act (21 U.S.C. 848); or any act or activity
constituting an offense listed in 18 U.S.C. 1961(1), with respect to any act or
threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion,
dealing in obscene matter, or in dealing in narcotics or other dangerous drugs
which is chargeable under State law and punishable for more than one year; 1 8
U.S.C. 201 (bribery); 18 U.S.C. 224 (sports bribery); 18 U.S.C. 659 (theft from
interstate shipment); 18 U.S.C. 664 (embezzlement from pension and welfare
funds); 18 U.S.C. 891-894 (extortionate credit transactions); 18 U.S.C. 1029
(fraud and related activity in connection with access devices); 18 U.S.C. 1084 (the
transmission of gambling information); 18 U.S.C. 1341 (mail fraud); 18 U.S.C.
1343 (wire fraud); 18 U.S.C. 1461-1465 (obscene matter); 18 U.S.C. 1503
(obstruction of justice); 18 U.S.C. 1510 (obstruction of criminal investigation); 18
U.S.C. 1511 (the obstruction of State or local law enforcement); 18U.S.C. 1512
(tampering with a witness, victim or informant); 18 U.S.C. 1513 (retaliating
against a witness, victim or informant); 18 U.S.C. 1951 (interference with
commerce, robbery or extortion); 18 U.S.C. 1952 (racketeering, except with
respect to untaxed paid liquor and arson); 18 U.S.C. 1953 (interstate
transportation of wagering paraphernalia); 18 U.S.C. 1954 (unlawful welfare fund
payments); 18 U.S.C. 1955 (the prohibition ofillegal gambling businesses); 18
U.S.C. 1958 (use of interstate commerce facilities in the commission of murder-
for-hire); 18 U.S.C. 2251, 2251 A, 2252, and 2258 (sexual exploitation of
children); 18 U.S.C. 2321 (trafficking in certain motor vehicles or motor vehicle
parts); 18 U.S.C. 2312 and 2313 (interstate transportation of stolen motor
vehicles); 18 U.S.C. 2314 and 2315 (interstate transportation of stolen property);
18 U.S.C. 2421-24 (white slave traffic); any act which is indictable under 29
U.S.C. 186 (restrictions on payments and loans to labor organizations) or 29
U.S.C. 501(c) (embezzlement from union funds); any offense involving fraud
connected with a case under title 1 1, fraud in the sale of securities, and the
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felonious manufacture, importation, receiving, concealment, buying, selling, or
otherwise dealing in narcotic or other dangerous drugs, punishable under any law
of the U.S."
(U//FOUO) (The above SUAs in Section 1956 and violations specified in
Section 1961 are changed occasionally, [for current RICO predicate offenses],
272-4, and 272-1 1 [for current SUAs].)
2. (U//FOUO) Dmg Enforcement Administration
(U//FOUO) The Drug Enforcement Administration shall have
investigatory jurisdiction over violations of sections 1956 or 1957 involving the
specified unlawful activities of, with respect to a financial transaction occurring in
whole or in part in the U.S., an offense against a foreign nation involving the
manufacture, importation, sale, or distribution of a controlled substance (as such
term is defined for the purpose of the Controlled Substances Act) including 21
U.S.C. 830 (relating to precursor and essential chemicals) and 857 (relating to
transportation of drug paraphernalia); or any act or acts constituting a continuing ■
criminal enterprise, as that term is defined in section 408 of the Controlled
Substances Act (21 U.S.C. 848); or any of the predicate offenses enumerated in
18 U.S.C. 1961(1) dealing in narcotics or other dangerous drags which are
chargeable under State law and punishable for more than one year, or the
felonious manufacture, importation, receiving, concealment, buying, selling, or
otherwise dealing in narcotics or other dangerous drugs, punishable under any law
of the U.S.
C. (U//FOUO) U.S. Postal Service
(U//FOUO) The investigative jurisdiction of the Postal Inspection Service
is limited by 18 U.S.C. 3061 to offenses regarding property in the custody of the
Postal Service, property of the Postal Service, use of the mails, other postal
offenses, and offenses for which the Postal Service has been delegated ‘
investigative authority pursuant to 1 8 U.S.C. 3061 (b)(2). Subject to these
limitations, the Postal Inspection Service shall have investigative jurisdiction over
violations of sections 1956 and 1957 involving the specified unlawful activities of
18 U.S.C. 201 (bribery of public officials and witnesses); 18 U.S.C. 500-503
(counterfeiting of money orders, post cards, indicia of postage and postmarking
stamps); 18 U.S.C. 641 (theft of public money, property or records); 18 U.S.C.
1029 (fraudulent activity in connection with access devices) with respect to
violations involving postal employees, fraud against the Postal Service or where
the primary focus of the offense is mail fraud or a violation of 1 8 U.S.C. 21 14
(postal robbery); 18 U.S.C. 1341 (mail fraud); 18 U.S.C. 1343 (wire fraud) where
the primary focus of the offense is mail fraud; 1 8 U.S.C. 1461 and 1463 (mailing
of obscene matter); 18 U.S.C. 1503, 1510-1513 (obstruction of justice); 18 U.S.C.
1952 (mailing in aid of racketeering enterprises); 18 U.S.C. 1961 (1)(A)
(organized crime); 18 U.S.C. 2114 (robbery of mail, other property); 18 U.S.C.
2251, 2252 (sexual exploitation of minors); any 18 U.S.C. 1961 (1) offense
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dealing in narcotics and other dangerous drugs which are chargeable under state
law and punishable for more than one year, or by the felonious manufacture,
importation, receiving, concealment, buying, selling, or otherwise dealing in
narcotics or other dangerous drugs punishable under any law of the U.S., or any
act or acts constituting criminal enterprise, as that term is defined in section 408
of the Controlled Substances Act (21 U.S.C. 848); 21 U.S.C. 843 (b) (use of mails
to violate Controlled Substances Act); and, Section 1 822 of the Mail Order Drug
Paraphernalia Control Act (21 U.S.C. 857) (transportation of drug paraphernalia.
Section IV. (U//FOUO) Undercover Operations ’
(U//FOUO) This MOU will govern the conduct of all money laundering
investigations under sections 1956 and 1957 in that all parties hereto agree that all
undercover operations will be reviewed using each bureau's internal guidelines,
the objectives of which are consistent with existing Attorney General Guidelines
on undercover operations.
Section V. (U//FOUO) Seizure and Forfeiture
(U//FOUO) Any property involved in a violation of section 1 956 or 1957
that a Treasury or Justice bureau or the Postal Service has authority to investigate
under Section III of this MOU may be seized by that bureau or the Postal Service,
if that property is subject to forfeiture to the U.S. under 1 8 U.S.C. 981(a)(1)(A) or
981(a)(1)(B).
(U//FOUO) Where a Treasury or Justice bureau or the Postal Service
would have authority to seize property under the authority stated in the preceding
paragraph is not present to make the seizure, any Treasury or Justice bureau or the
Postal Service that is present may seize the property and shall immediately turn
over that property to the bureau having Section III investigatory jurisdiction,
where the forfeiture processing shall occur.
(U//FOUO) Any property seized under this Section shall, upon forfeiture
under 18 U.S.C. 981 or 982, be apportioned among the appropriate Treasury or
Justice bureaus or the Postal Service in accordance with their respective
contribution to the overall efforts expended in the investigation, seizure, or
forfeiture.
(U//FOUO) Pursuant to 18 U.S.C. 981(e) and, where appropriate, the
Justice Department, the Treasury Department or the Postal Service forfeiture
guidelines, apportionment may include equitable transfers to any other Federal
agency or State or local authorities, which participated directly in any of the acts
which led to the seizure or forfeiture.
(U//FOUO) Any dispute regarding the seizure, forfeiture, apportionment,
or disposition of property under this section shall be governed by the disputes
resolution procedure in Section IX of this MOU.
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(U//FOUO) This MOU does not affect Treasury or Justice bureaus’ or the
Postal Service’s authority to seize property or the disposition of such property
under statutory seizure and forfeiture provisions not based on section 1 956 and
1957 violations.
A. (U//FOUO) Seizure of Attorney Fees:
(U//FOUO) Treasury and Justice bureaus and the Postal Service will
follow DOJ guidelines in reference to the seizure and forfeiture of any money or
property that is held by an attorney or payment for the defense of a client. See U.S.
Attorneys Manual 9-1 1 1.000, et seq.
Section VI. (U//FOUO) Prosecution
(U//FOUO) A bureau that conducts an investigation under the authority of
tills MOU shall coordinate with Justice Department attorneys.
Section VH. (U//FOUO) Notice, Coordination, and Lead Bureau
A. (U//FOUO) Notice
1. (U//FOUO) If, during the investigation of a section 1956 or 1957
violation, a bureau discovers an SUA or a transaction reporting violation over
which another bureau has investigatory jurisdiction, that bureau shall give notice
to the bureau which has investigatory jurisdiction over the SUA or to the Internal
Revenue Service or Customs, as appropriate, in the case of a transaction reporting
violation, and to consult prior to taking any investigative actions impacting on the
other bureau's jurisdiction.
2. (U//FOUO) If a bureau discovers transactions involving the proceeds of
an SUA conducted with intent to engage in a violation of section 7201 or 7206 of
the Internal Revenue Code, that bureau shall give notice to the Internal Revenue
Service and coordinate the subsequent investigation with the IRS. To the extent
that any IRS money laundering investigation requires the acquisition of evidence
concerning an underlying SUA, the IRS shall notify the bureau having jurisdiction
over the SUA and coordinate the subsequent investigation with that bureau.
3. (U//FOUO) Notice under this section will ordinarily be made at'
supervisory field level and will, at a minimum, require a complete summary of the
facts and circumstances of the investigation.
(U//FOUO) However, in those instances where a bureau undertakes an
investigation in which it determines that field level disclosure would be
detrimental to the investigation, the required notice will be made at the
headquarters level and dissemination restricted to selected individuals consistent
with the need to maintain security of the investigations.
B. (U//FOUO) Coordination and Determination of Lead Bureau
(U//FOUO) Investigatory actions which involve areas outside the
investigating bureau's existing jurisdiction, independent of the money laundering
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statute, shall be conducted only in coordination with the bureau(s) which do have
existing jurisdiction independent of the money laundering statute. Coordination
requires, at a minimum, a determination of the degree of cooperation necessary
between the coordinating bureau(s) and includes continuing dialogue as the case
develops. At the request of any coordinating bureau, at any time as the case
develops, there shall be a determination of the lead bureau for the Section 1956 or
1957 investigation. The determination of lead bureau does not preclude a
subsequent request by a coordinating bureau for redetermination of the lead as
compelling facts and circumstances warrant.
(U//FOUO) The determination of the lead bureau will be made at the
supervisory field level by the bureaus involved and will be governed by which
bureau has the paramount investigatory interest. In determining which bureau has
the paramount investigatory interest, the factors to be considered shall include,
but not be limited to:
• (U//FOUO) Likely impact on major criminal enterprises
• (U//FOUO) Likelihood of successful prosecution
• (U//FOUO) Existence of an SUA, as defined in section 1956(c)(7)
• (U//FOUO) Jeopardy to informants, undercover agents, or third parties
• (U//FOUO) Commitment of investigatory resources
• (U//FOUO) Any other matter of substantive investigative interest.
Section VIII. (U//FOUO) Jointly Conducted Investigations
(U//FOUO) Treasury and Justice bureaus and the Postal Service are
encouraged to enter into joint investigatory endeavors in circumstances that may
necessitate or justify the use of skills and resources of more than one bureau. The
specific details of each joint investigation, including the role of each bureau in the
endeavor, will be formulated at the onset of the investigation and will be provided
to each bureau's headquarters by each bureau’s established procedures. While
differing circumstances will result in varied arrangements from project to project,
certain conditions will always apply:
• (U//FOUO) Participating personnel will be supervised by their respective
bureaus. This does not alter any other concerning supervision of investigatory
personnel
(U//FOUO) Money Laundering Manual
• (U//FOUO) Only one evidentiary document, such as a record of
interview will be prepared, and a copy will be furnished to the other bureau at the
time the document is prepared
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♦ (U//FOUO) Resources and investigatory expertise will be provided to the
requesting bureau when the investigatory matter meets the criteria of the
requested bureau and when available resources allow
• (U//FOUO) Any contact with the news media, such as press releases,
will be coordinated and agreed to in advance by the bureaus involved
Section IX. (U//FOUO) Dispute Resolution
(U//FOUO) The Secretary, the Attorney General and the Postmaster
General contemplate that in cases of overlapping jurisdiction, the appropriate
bureaus will work in concert to the extent authorized by law. Any disputes
between bureaus should be resolved at the field level. When this cannot be
accomplished, the matter will be referred to the respective headquarters' point of
contact. In the event that disputes cannot be resolved by the bureau headquarters,
the matter will be expeditiously referred to the Assistant Attorney General,
Criminal Division, DOJ, and the Assistant Secretary for Enforcement, Department
of the Treasury, and in disputes involving the Postal Service, to the Chief Postal
Inspector, whose decisions shall be final.
Section X. (U//FOUO) Extraterritorial Jurisdiction
(U//FOUO) Treasury and Justice bureaus and the Postal Service must
immediately notify the appropriate prosecuting attorney or other designated DOJ
official if, in the course of a section 1956 or section 1957 investigation, it
becomes likely that extraterritorial jurisdiction under section 1956(f) or section
1957(d) will be invoked. See U.S. Attorneys Manual 9-105. 100.
Section XI. (U//FOUO) Amendment
(U//FOUO) This MOU may be amended by deletion or modification of
any provision contained herein, or by addition of new provisions, after written
concurrence of all the parties to the MOU.
(U//FOUO) Section XII. Termination
(U//FOUO) This MOU will remain in effect until terminated by the
Attorney General or the Secretary or the Postmaster General upon 30 days'
written notice.
Section XIII. (U//FOUO) Approval
(U//FOUO) This MOU becomes effective when approved by the parties
identified below.
ptfcl 1C, A Ijvfrty {Million* p,
Peter K. Nunez William P. Barr
Assistant Secretary (Enforcement) Deputy Attorney General U.S.
Department of Treasury U.S. DOJ
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Date Date
Charles R. Clauson
Chief Postal Inspector
2/I6/3O
Date
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(U) Appendix D; Sources of Additional Information
(TJ) FBI Intranet Resources:
b7E
(U) DOJ Intranet Resourcesj |
(U) External Web (Internet) Resources: .
http://usinfo.state.gov/ei/economic_issues/terrorist_financing/money_
laundering/money_reading.html - Department of State; for additional information on
money laundering
(U) http://www.egmontgroup.org - Egmont Group; for additional information regarding
the Egmont group and law enforcement requests
(U) www.fincen.gov/hr3162.pdf - FinCEN; for additional information on money
laundering
(U) www.treas.gov/offices/enforcement/pdf/ - Department of the Treasury; for a full copy
of the U.S. Money Laundering Threat Assessment
(U) http://www.fatf-gafi.org - FATF; for additional information regarding the FATF and
recent money laundering assessments
(U) http://www.state.gov, www.treas.gov, www.cdi.gov - Various; for information on
Designated Terrorist Lists
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(U) Appendix E: Contact Information
Criminal Investigative Division
AD Kevin L. Perkins
202-324-4260
Deputy Assistant Director David A. Cardona
202-324-5740
Financial Crimes Section
Section Chief Sharon E. Ormsby
Asset Forfeiture/Money Laundering Unit
Unit Chief
—
AF/MLU Address:
FBI Headquarters, Room 3901
J. Edgar Hoover Building
935 Pennsylvania Avenue, NW
Washington, D.C. 20535
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(U) Appendix F: Key Words
(U) 111 - FBI investigative classification for money laundering matters, subclassified
A-F.
(U) a.k.a. - also known as.
(U) Black market peso exchange - a type of informal value transfer system typically
used in the Colombian drug trade. Funds can be transferred through this system with the
assistance of black market currency brokers and their agents in various countries.
(U) Bulk cash smuggling - the process of physically transporting currency or monetary
instruments, such as traveler’s or cashier’s checks, across national borders.
(U) Cap - a maximum amount or number.
(U) Casas de Cambio - currency exchange houses specializing in Latin American
currencies and transactions. These businesses provide various money services to
customers and are common along the U.S./Mexican border.
(U) Closed system - a type of stored value or prepaid card that can be used for limited
purposes. Closed system cards typically can be used only to purchase products or services
from a specific merchant and cannot be used for ATM withdraws.
(U) Cooling-off period - the time period following the purchase of a life insurance
contract during which the contract can be cancelled without penalty.
(U) Correspondent account - accounts held by U.S. banks on behalf of foreign banks.
Such accounts allow foreign banks to clear U.S. dollar transactions.
(U) Criminally derived property - any property constituting, or derived from, proceeds
obtained from a criminal offense.
(U) Dependent/parallel transactions - transactions defined in the USA PATRIOT Act
as they pertain to money remitter businesses. Such transactions include those that are
connected to, or associated with, other transactions involving the transfer or transmission
of illegal proceeds.
(U) Digital currency - also known as e-currency, digital currency is a cyber-based means
of exchange typically backed by gold, silver, or other precious metals. Digital currencies
are unique to their issuers and can only be used to purchase products and services from
vendors who accept the issuer’s specific form of currency.
(U) Due diligence - appropriate action or appropriate time given.
(U) Egmont - an international network of more than 100 countries that have
implemented national centers to collect, analyze, and disseminate information on
suspicious or unusual financial activity from the financial industry.
(U) Et seq. - abbreviation for the Latin phrase et sequentes, meaning "and the following."
It is commonly used by lawyers to include numbered lists, pages, or sections after the
first number is stated.
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(U) Facilitation cases - cases where the FBI receives proceeds derived from one or more
of the specified unlawful activities (18 U.S.C. §1 956(c) (7)), then places the money into
the financial system or converts it in some way to launder it toward the criminal
organization.
(U) Financial Action Task Force - an inter-governmental body whose purpose is the
development and promotion of national and international policies to combat money
laundering and terrorist financing.
(U) Financial Crimes Enforcement Network - Bureau of the Department of the
Treasury whose mission is to safeguard the financial system from the abuses of financial
crime, including terrorist financing, money laundering, and other illicit activity.
(U) Financial transaction -1) a transaction that in any way or degree affects interstate or
foreign commerce: a) involving the movement of funds by wire or other means,
b) involving one or more monetary instruments, or c) involving the transfer of title to any
real property, vehicle, vessel, or aircraft. 2) a transaction involving the use of a financial
institution that is engaged in, or the activities of which affect interstate or foreign
commerce in any way or degree.
(U) Gift cards - prepaid cards that can be purchased anonymously through retail outlets
and are given to others.
(V) Giros - a currency exchange house specializing in Latin American currencies and
transactions. These businesses provide various money services to customers and are
common along the U.SVMexican border.
(V) Hawala - an informal mechanism of transferring money offshore without the
physical movement of currency. Hawala transactions are often conducted using
telephones and code words.
(U) Hawaladar - the coordinator and manager of a Hawala business.
(U) Informal value transfer systems - mechanisms used to transfer hinds from one
location to another without the use of traditional or formal banking channels.
(U) In rem - against the property.
(U) Interbank (correspondent account) - accounts held by U.S. banks on behalf of
foreign banks. Such accounts allow foreign banks to clear U.S. dollar transactions.
(U)Integration - the third stage of the money laundering process; the use of laundered
proceeds to purchase products and services in mainstream commerce.
(U) Layering - the second stage of the money laundering process; the separation of
illegal proceeds from their original sources by conducting a series of financial
transactions.
(U) Legat - Legal attache. A representative of the FBI in a foreign jurisdiction.
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(U) Loan-back schemes - schemes that involve illegal deposits at financial institutions
where the criminal receives a "loan" from the bank, trust, corporation, or fiduciary. The
loan is actually the criminal’s own illegally derived money.
(U) Monetary transaction - the deposit, withdrawal, transfer, or exchange, in or
affecting interstate or foreign commerce, of funds or a monetary instrument by, through,
or to a financial institution, but such term does not include any transaction necessary to
preserve a person's right to representation as guaranteed by the Sixth Amendment to the
Constitution.
(U) Money laundering - the process by which criminals conceal or disguise their
illegally derived proceeds, typically for the purpose of promoting or facilitating future
criminal activity, disguising the origin of the proceeds, evading taxes, or avoiding
reporting requirements.
(U) Money services businesses - nonbank financial institutions that provide an array of
financial services without the need for customer accounts. Such services include money
transfers, check cashing, foreign currency exchange, and the issuance of money orders
and traveler’s checks.
(U) Nexus - a causal link.
(U) One-off - a one-time event.
(U) Open system - a type of stored value or prepaid card that does not limit use to a
particular merchant or type of product or service. Such card types often have "reload"
features and can be used to withdraw funds from ATMs worldwide.
(U) Placement - the first stage of the money laundering process; the initial use of
illegally derived proceeds.
(U) Predicate offenses - Unlawful activities.
(U) Prepaid debit card - a card that is funded in advance, typically through a connection
with a bank account, and can be used for the purchase of products and services, to
withdraw funds at various locations via ATMs or to transfer funds to other card holders.
(U) Sensitive circumstance - circumstances that may exist in an undercover operation
that would require Group I authority as per the Attorney General's Guidelines and the
Field Guide for Undercover and Sensitive Operations.
(U) Shell/Shelf company - a company that exists only on paper and has no real operating
business or physical location.
(U) Smart cards - prepaid cards that keep track of balances directly on the card through
computer chips or other technology.
(U) Smurf - an individual recruited to assist in the money laundering process by
conducting a series of structured financial transactions on behalf of the launderer, at one
or more financial institutions, and in amounts below the $10,000 reporting threshold.
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(U) Smurfing - the process of engaging in a series of structured financial transactions on
behalf of a money launderer, at one or more financial institutions, and in amounts below
the $10,000 reporting threshold.
(U) Specific unlawful activity - specific criminal acts listed in the U.S. money
laundering statutes as predicate offenses for which the crime of money laundering can be
charged.
(U) Sting - an undercover operation.
(U) Stored value cards - cards that can be purchased and funded in advance of their use.
Stored value cards come in many forms to include cards that store balances on the cards
themselves and those linked to financial accounts.
(U) Structuring - financial transactions conducted below the BSA reporting threshold
for the sole purpose of evading reporting requirements.
(U) Title HI - the title of the Federal Criminal Code that sets forth the terms, conditions,
and authorities for using “bugs” or other listening devices by law enforcement in criminal
investigations.
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(U) Appendix G: Acronyms
Automated Case Support
Assistant Director
Assistant Director in Charge
Asset Forfeiture and Money Laundering Section
Attorney General
Attorney General's Guidelines
Attorney General’s General Crime Guidelines
Attorney General’s Guidelines for Domestic FBI Operations
Attorney General's Guidelines for Extraterritorial FBI
Operations and Criminal Investigations
Anti-Money Laundering
Assistant Special Agent in Charge
American Telephone and Telegraph
Bureau of Alcohol, Tobacco, Firearms, and Explosives
Automated Teller Machines
Assistant United States Attorney
Bank Secrecy Act
Black Market Peso Exchange
Customer Due Diligence
Currency Exchangers
Confidential Informant
Currency Exchange Brokers
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cm
Criminal Investigative Division
CM®.
Currency or Monetary Instrument Report
CPOT
Consolidated Priority Organization Targets
CTR
Currency Transactions Reports
CTRC
Currency Transactions Reports by Casino
CUORC
Criminal Undercover Operations Review Committee
.CHS
Confidential Human Source
DEA
Drug Enforcement Administration
DEP
Designation of Exempt Person
DIOG
Domestic Investigations and Operations Guide
DOJ
Department of Justice
DTO
Designated Terrorist Organization
EC
Electronic Communication
EPA.
Environmental Protection Agency
FATF
Financial Action Task Force
FBAR
Foreign Bank and Financial Accounts Report
FBI
Federal Bureau of Investigation
FBIHQ
Federal Bureau of Investigation Headquarters
FCS
Financial Crimes Section
FDIC
Federal Deposit Insurance Corporation
FGUSO
Field Guide for Undercover and Sensitive Operations
FinCEN
Financial Crimes Enforcement Network
FIU
Financial Intelligence Unit
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FTO
Foreign Terrorist Organizations
G/CEP
Gangs and Criminal Enterprise Program
ICE
Immigration and Customs Enforcement
IDW
Investigative Data Warehouse '
IRS
Internal Revenue Service
ITAR
Interstate Transportation in Aid of Racketeering
rvrs
Informal Value Transfer Systems
LEA
Law Enforcement Agency
MAOP
Manual of Administrative Operations and Procedures
MIOG
Manual of Investigative Operations and Guidelines
ML
Money Laundering
MLAT
Mutual Legal Assistance Treaties
MOU
Memorandum of Understanding
MSB
Money Services Business
OC
Organized Crime
OF AC
Office ofForeign Assets Control
OLA
Office of International Affairs, DOJ
PDC
Prepaid Debit Cards y
RICO
Racketeer Influenced and Corrupt Organizations
RMSB
Registration of Money Services Business
SA
Special Agent
SAC
Special Agent in Charge
SAR
Suspicious Activity Report
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SARC
Suspicious Activity Report by Casinos and Card Clubs
SARI
Suspicious Activity Report by Insurance Companies
SARM
Suspicious Activity Report by Money Services Businesses
SARSF
Suspicious Activity Report by the Security and Futures
Industries
SOD
Special Operations Division
STR
Suspicious Transaction Report
SUA
Specified Unlawful Activity
SVC
Stored Value Cards
TFOS
Terrorist Financing Operations Section
u.s.
United States
UCE
Undercover Employee
uco
Undercover Operation
USA
United States Attorney
USA PATRIOT Act
Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act.
USAO
United States Attorney’s Office
U.S.C.
United States Code
uses
United States Customs Service
usou
Undercover and Sensitive Operations Unit
USPER
United States Person; US Person; U.S. Person; USP; USPs;
USPERs
USPS
United States Postal Service
USSS
United States Secret Service
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USUA
Unknown Specified Unlawful Activity
VCMO
Violent Crimes and Major Offenders
WCC
White Collar Crime
WebCBRS
Web Currency and Banking Retrieval System
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ACLURM006485
Live Music
Archive
Librivox
Free Audio
Metropolitan Museum
Cleveland
Museum of Art
Internet
Arcade
Console Living Room
Open Library
American
Libraries
TV News
Understanding
9/11